Bitcoin Mining Hash Rate and Difficulty is Down–Why it is good for Retail Miners

July 22, 2021 - Crypto News, Expert Commentary

Bitcoin-Mining-Difficulty-Down

One man’s meat is another man’s poison. 

Sometimes, the alternate proverb ‘one man’s poison is another man’s medicine’ describes the same situation. Either way, you probably get the hang of it. In life, misfortune for one person can be an opportunity for another. 

One of the fascinating recent developments has been the ban on Bitcoin mining in China in the past month. This news shook the crypto industry because the country accounted for the overwhelming majority of global mining operations.

An Overnight Slump in Hash Rate 

On July 3, Bitcoin mining difficulty saw its largest downward adjustment in history: -28 percent. 

The most surprising part about this slump was that it was not exactly a shock. Developments elsewhere have had a significant impact on the headline Bitcoin statistics of the past few weeks. In short, it has become a lot easier and profitable to mine Bitcoin. The Bitcoin mining hash rate fell by more than 50 percent since its peak in May, crashing to around 55 EH/s by late June 2021.

The Bitcoin mining hash rate is the collective computing power of miners worldwide. This decline points to a systemic shock that occurred in the intervening period. 

There was only one: The Bitcoin mining ban in China

In mining circles, China was the elephant in the room. Then, the nation decided to pull the plug on miners, and the consequences have been far-reaching. 

The Bitcoin mining hash rate has gone off a cliff. Tens of thousands of miners are going offline in the most prominent mining nation in the world.

Bitcoin Mining Is Now More Distributed after The Crackdown in China  

As Chinese miners cry foul, others are having the times of their lives.  

The adjustments in hash rate and mining difficulty mean that miners in other countries are reaping more rewards from mining Bitcoin without changing a thing. Bitcoin mining is primarily for economic benefit, and these crypto miners are having the time of their lives. 

China has also warned financial institutions against handling crypto. These developments have led to uncertainty about Bitcoin in the country. Retail miners elsewhere could care less as their viability has gone up exponentially.

It is logical because they now own a larger piece of the pie. Bitcoin mining is highly competitive. Having close to half of the mining power going offline makes it easier for existing miners. 

Each miner tries to be the first to solve mathematical puzzles and add the following block of Bitcoin transactions to the blockchain. China accounted for more than 60 percent of mining before the government crackdown. 

That move has made it a whole lot less competitive. The proof is in the hash rate decline. 

A Bitcoin mining crackdown that targets a specific geographical region is unprecedented. It just so happened that this region was the motherload of mining operations.  

Fewer crypto miners is a relief for others who want to earn more from their rigs. On July 3, it became 28 percent less difficult to mine Bitcoin. This drop is historical and is excellent news for miners who are not in China.

The U.S. Reaping Huge From the Hash Rate Migration and Decline

Data from the Cambridge Centre for Alternative Finance (CCAF) shows the changes in hash rate trends in recent months. 

Even before China decided to ban mining, the U.S. got a larger share of the mining hash rate. The U.S. saw a quadrupling of the hash rate from a mere 4.6 to 16.8 percent between September 2019 and April 2021. 

China’s share had declined to 46 percent by April. This figure was a pale shadow of the over three-quarters control miners in China had just two years ago.  Now that China has relinquished its remaining lead, the U.S. is likely to become the new global mining powerhouse. 

That said, it is unlikely that one country will reach the level of control that China had in its peak. This control should spread out more, which is great for the sustainability of Bitcoin. Extensive geographical decentralization will make Bitcoin less vulnerable to punitive regulations in one country. 

Bitcoin is a self-regulating system. The decline in mining difficulty is an automatic mechanism to handle the decrease in mining difficulty. That concept is great for an asset that aims to survive without government regulation. 

North American Miners in Prime Position to Reap 

A decline in mining difficulty is profitable for large-scale miners. Making even 10 percent more from Bitcoin mining is massive. Bitcoin is a valuable asset, and any slight adjustment can go a long way in improving profits. 

Institutional cryptocurrency miners in North America are salivating at this development. The misfortune of Chinese miners is their joy, and they can expect higher profitability in the short –term.  If North American miners had close to a 20 percent share of the hash rate before the bans, the figure could double within the year. 

Miners using the latest equipment will reap the primary benefit. The latest rigs, such as the Antminer S19 Pro, are considerably more potent than earlier ones like the S15. VBit Mining is proud of its direct line to Bitmain, which allows us to source the latest equipment at scale. 

This year, there has been a significant shortage of mining equipment. One cause is the global semiconductor chip shortage. Additionally, the massive crypto rally of late last year meant that miners placed orders through most of 2021, and manufacturers like Bitmain maxed out on their existing inventory. 

Hard To Predict How the Hash Rate Will Change 

The Bitcoin mining landscape is inviting for now. However, it should not be a cause to purchase old equipment that may gain a narrow window of profitability from the hash rate decline. It is difficult to predict how long the drop will last. 

To be safe, it is better to purchase next-generation equipment. Such equipment will retain viability even if the mining difficulty resets soon. 

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One man’s meat is another man’s poison. 

Sometimes, the alternate proverb ‘one man’s poison is another man’s medicine’ describes the same situation. Either way, you probably get the hang of it. In life, misfortune for one person can be an opportunity for another. 

One of the fascinating recent developments has been the ban on Bitcoin mining in China in the past month. This news shook the crypto industry because the country accounted for the overwhelming majority of global mining operations.

An Overnight Slump in Hash Rate 

On July 3, Bitcoin mining difficulty saw its largest downward adjustment in history: -28 percent. 

The most surprising part about this slump was that it was not exactly a shock. Developments elsewhere have had a significant impact on the headline Bitcoin statistics of the past few weeks. In short, it has become a lot easier and profitable to mine Bitcoin. The Bitcoin mining hash rate fell by more than 50 percent since its peak in May, crashing to around 55 EH/s by late June 2021.

The Bitcoin mining hash rate is the collective computing power of miners worldwide. This decline points to a systemic shock that occurred in the intervening period. 

There was only one: The Bitcoin mining ban in China

In mining circles, China was the elephant in the room. Then, the nation decided to pull the plug on miners, and the consequences have been far-reaching. 

The Bitcoin mining hash rate has gone off a cliff. Tens of thousands of miners are going offline in the most prominent mining nation in the world.

Bitcoin Mining Is Now More Distributed after The Crackdown in China  

As Chinese miners cry foul, others are having the times of their lives.  

The adjustments in hash rate and mining difficulty mean that miners in other countries are reaping more rewards from mining Bitcoin without changing a thing. Bitcoin mining is primarily for economic benefit, and these crypto miners are having the time of their lives. 

China has also warned financial institutions against handling crypto. These developments have led to uncertainty about Bitcoin in the country. Retail miners elsewhere could care less as their viability has gone up exponentially.

It is logical because they now own a larger piece of the pie. Bitcoin mining is highly competitive. Having close to half of the mining power going offline makes it easier for existing miners. 

Each miner tries to be the first to solve mathematical puzzles and add the following block of Bitcoin transactions to the blockchain. China accounted for more than 60 percent of mining before the government crackdown. 

That move has made it a whole lot less competitive. The proof is in the hash rate decline. 

A Bitcoin mining crackdown that targets a specific geographical region is unprecedented. It just so happened that this region was the motherload of mining operations.  

Fewer crypto miners is a relief for others who want to earn more from their rigs. On July 3, it became 28 percent less difficult to mine Bitcoin. This drop is historical and is excellent news for miners who are not in China.

The U.S. Reaping Huge From the Hash Rate Migration and Decline

Data from the Cambridge Centre for Alternative Finance (CCAF) shows the changes in hash rate trends in recent months. 

Even before China decided to ban mining, the U.S. got a larger share of the mining hash rate. The U.S. saw a quadrupling of the hash rate from a mere 4.6 to 16.8 percent between September 2019 and April 2021. 

China’s share had declined to 46 percent by April. This figure was a pale shadow of the over three-quarters control miners in China had just two years ago.  Now that China has relinquished its remaining lead, the U.S. is likely to become the new global mining powerhouse. 

That said, it is unlikely that one country will reach the level of control that China had in its peak. This control should spread out more, which is great for the sustainability of Bitcoin. Extensive geographical decentralization will make Bitcoin less vulnerable to punitive regulations in one country. 

Bitcoin is a self-regulating system. The decline in mining difficulty is an automatic mechanism to handle the decrease in mining difficulty. That concept is great for an asset that aims to survive without government regulation. 

North American Miners in Prime Position to Reap 

A decline in mining difficulty is profitable for large-scale miners. Making even 10 percent more from Bitcoin mining is massive. Bitcoin is a valuable asset, and any slight adjustment can go a long way in improving profits. 

Institutional cryptocurrency miners in North America are salivating at this development. The misfortune of Chinese miners is their joy, and they can expect higher profitability in the short –term.  If North American miners had close to a 20 percent share of the hash rate before the bans, the figure could double within the year. 

Miners using the latest equipment will reap the primary benefit. The latest rigs, such as the Antminer S19 Pro, are considerably more potent than earlier ones like the S15. VBit Mining is proud of its direct line to Bitmain, which allows us to source the latest equipment at scale. 

This year, there has been a significant shortage of mining equipment. One cause is the global semiconductor chip shortage. Additionally, the massive crypto rally of late last year meant that miners placed orders through most of 2021, and manufacturers like Bitmain maxed out on their existing inventory. 

Hard To Predict How the Hash Rate Will Change 

The Bitcoin mining landscape is inviting for now. However, it should not be a cause to purchase old equipment that may gain a narrow window of profitability from the hash rate decline. It is difficult to predict how long the drop will last. 

To be safe, it is better to purchase next-generation equipment. Such equipment will retain viability even if the mining difficulty resets soon. 

For now, North American miners can savor their good fortune. Some Chinese miners will emigrate while others go off the grid completely. Others will look to invest in North American-hosted mining companies or those offering cloud mining services. Professional hosted mining of Bitcoin and crypto is more transparent because it is your equipment doing direct work. VBit Mining offers exquisite hosted services for such prospective miners seeking to cut losses in China. 

For now, miners are looking at solid returns through the end of 2021. Chinese miners may be experiencing the poison, but it has turned out to be medicine for North American miners. 

Operators  like VBit Mining, for example, can afford to think about the future with some ease. Bitcoin mining is about constant adjustments to accommodate changes. A decline in hash rate is a welcome development as it makes returns from a standard mining operation generate more. Therefore, we could be entering a golden era for North American miners. 

It will take time for the equipment from China to get back online. The mining difficulty could remain great for some time. Either way, elite equipment and favorable mining conditions place an operation in a good position. 

VBit Mining Is a Professional Equipment Reseller 

In summary, getting elite equipment is the way to go. 

VBit Mining has a direct line to Bitmain, and this allows us to obtain state-of-the-art equipment that provides a competitive edge in mining. 

Additionally, they offer hosted mining services to those looking for the proper setup. Our data centers in North America provide natural cooling and use cheap renewable energy. These variables cut the maintenance costs of any operation significantly and make mining worthwhile. 

Visit the VBit Mining shop today to learn more about Bitcoin mining.

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