Right now, as the Bitcoin (BTC) hash rate is moving away from China, it has also dropped noticeably. Chinese crackdown has forced 45% of crypto miners to relocate, but Bitcoin (BTC) is not affected much from this. Undoubtedly it has slowed down the block mining speed to half only, but it is a temporary hindrance.
Founding partner of Castle Island Ventures, Nic Carter, has stated that Bitcoin (BTC) mining is a completely independent industry. Ban on mining neither stops its transactions nor exchanges. The drop in BTC price is due to other factors, not because of hashrate reduction. Hashrate reduction affects the supply and demand chain, which results in a hike in price.
Chief executive officer of Blockchain.com, Mr. Peter Smith, opined that it is fantastic and marvelous news for Bitcoin investors. He further said that mining is not going to be restricted to a few countries only. The trend of expansion of mining sites has been already seen since the beginning of 2021, and now after the latest crackdown by China, the miners are relocating to different parts of the world.
On the one hand, analysts have agreed that the lowered hashrate has no long-term effect, but on the other hand, they have also warned about short-term outcomes.
Colin Wu, a journalist from China, has said that after the beginning of relocation from China to Kazakhstan and North America, the hashrate has started to build up, but it will take almost two quarters to return to its previous numbers unless China shows some leniency towards miners.
Zack Voell from Compass mining said that miners had fetched the attention from investors as the price is going down along with hashrate. According to him, some of the miners have lost 30 to 80 percent hashrate.
As per numbers shared by Glassnode, miners are facing a sharp decline in revenue. Revenue generated by miners on 28th June is 80% less compared with that of May. According to Glassnode data, this is the largest hashrate drop ever faced by the crypto mining industry. Mining difficulty is predicted to drop 25% by coming Friday.
The abatement in the mining hashrate and difficulty adjustment shows the insane level of the crackdown on miners in China, especially in regions of Xinjiang and Sichuan. Those miners who are still operating mining farms may receive a large share of mining rewards in upcoming difficulty adjustments.