Western Miners Cultivate More Returns as China’s Crypto Mining Crackdowns Persists
Bitcoin mining companies in the west yield has become more accessible and profitable, as the pool of miners competing to form tokens shrinks due to China’s strict crackdown on the country’s crypto operations.
Miner competition is currently at a considerable low; thus, mining companies are seeing higher profits. Moreover, these profits are more significant than the losses due to the drop in BTC. Therefore the gains are positive overall.
Stock prices of some of the biggest bitcoin mining companies saw a significant rise. Marathon and Riot are two of the biggest mining firms in the west. They were leading in the chart showing the trend in the stock prices.
Reduction in Hash Rate
Bitcoin miners account for almost 65% of the network’s hash rate in China. However, the miners were mandated to halt their operations after the government announced a ban on mining activities. As a result, the global BTC hash rate dropped off significantly. As a result, western miners presently have a more significant relative contribution to the hash rate.
Bitcoin’s hash rate reflects the computation power needed to validate tokens, and it’s automatically adjusted by the network’s algorithm every two weeks to ensure a balance in miner productivity.
Bitcoin Mining Difficulty
Bitcoin recorded its most significant difficulty drop ever, following China’s recent crackdown on crypto mining. The mining difficulty dropped by nearly 30% at block 689,471. As a result, more money may be going to the miners who remain online. However, the plunge in difficulty suggests that there is a decline in competition.
A few months ago, China announced that it would be getting more vigilant on crypto mining and trading because of the new asset class’s financial risks. Although a ban on digital assets is not unique within the country, it reiterates previous standings on the dangers of virtual currencies to economic stability in light of recent volatility.
What Next for Bitcoin
Cryptocurrency mining was a very profitable industry for Chinese miners. Now, they have resorted to moving their operations to other regions or selling mining machines to foreign mining farms. Bitmain, the largest mining rig maker, temporarily halted its sales in late June after the cost of top-tier devices plunged by about 75%.
At the time of this writing, BTC was trading at 34,784.60, down about 47% from its peak in April. Bitcoin has not shown any signs of improvement, and it has also not been dropping off further. Based on the current trend, bitcoin seems to be in a state of stagnation. It’s not easy to predict which way the coin will break out of this zone.