Bitcoin mining difficulty drops 16% as miners pull out of China under Beijing crackdown
|- China’s recent crackdown on crypto mining and trading has pushed firms to cease operations in the country.
- Bitcoin mining difficulty suffers its greatest blow this year, a decrease of 16%.
- The difficulty adjustment means that it takes longer for each block to be produced on the BTC network.
Bitcoin mining difficulty fell sharply over the weekend, marking the largest decline this year. Mining firms in China have been pulling operations out of the country as Beijing has intensified its crackdown on cryptocurrencies.
Chinese miners anticipate crackdown
Bitcoin mining difficulty, which measures how much computer power is needed to produce a new coin, dropped significantly by 16% on May 30. The network adjusts the difficulty around once every two weeks to reflect the level of competition between miners. The recent decline indicates that there is less competition.
Over 75% of miners that validate Bitcoin transactions are based in China. However, the Chinese government has called for a “severe” crackdown on and punishment of “illegal securities activities,” including crypto mining and trading.
Beijing cited the reason behind new measures was to stem risks and ensure financial stability. Shortly following the announcement, the crypto market witnessed bloodshed and saw digital asset prices tumbling by double-digits.
Several crypto mining firms and exchanges began to halt their operations in China, including Huobi, the world’s second-largest crypto exchange by volume. The company stated that it had suspended mining hosting services and the sale of Bitcoin mining machines.
Huobi is the eighth-largest mining pool, contributing 4% of the world’s Bitcoin hash rate. While the firm will stop selling crypto mining machines in China, it would look to expand overseas.
BTC.TOP, a mining pool that enables groups to work together and mine Bitcoin, has announced that it will suspend operations in China due to regulatory concerns. Founder Jiang Zhuoer stated that his firm would shift to North America, given the recent crackdown.
While Beijing’s anti-crypto stance is nothing new, China has not banned cryptocurrency mining in the past.
According to a Chinese publication, government officials believe that crypto could hurt uneducated investors and that mining is of no use to the real economy. In the autonomous region of Inner Mongolia, state officials have already begun to crack down on mining activities and are reportedly considering adding Bitcoin miners to social credit blacklists.
While the difficulty of mining the leading cryptocurrency has been lowered, the adjustment also increased the average time of block production. Producing a block takes almost four minutes longer today than on May 13, when the average time taken for block production averaged around eight minutes and 14 seconds.
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