At the beginning of the month, the Chinese government ordered to stop all Bitcoin mining activities.
This led to a sharp drop in hash rate and difficulty, which determines how difficult it is to mine a Bitcoin.
On-chain data now shows that the biggest drop in Bitcoin’s history may soon take place.
BTC Mining Difficulty Will Continue to Decrease in the Short Term
Bitcoin difficulty could soon experience its biggest drop if it is adjusted again. Difficulty describes the degree of complexity for miners to find a certain block and thus mine Bitcoin. On-chain analysts assume that the coming drop at block 689,472 will be over 20% in around four days. So far, the biggest drops have been 5% and 16% (May 30, 2021, and June 14, 2021).
The difficulty is adjusted every 2016 block, depending on the total hash rate. Ideally, it takes 10 minutes to mine a Bitcoin block. However, if many miners go offline, it would theoretically take longer than 10 minutes, so the difficulty of mining a new block is shut down.
The average hash power fell from 142 exa hash per second on June 14th to just under 100 exa hash per second. This drop was mainly due to the shutdown of mining facilities in the Chinese provinces of Xinjiang and Sichuan.
Thousands of ASIC Miners Shut Down in China
Bad news came earlier this month when the Chinese government announced that it would end mining activities in Xinjiang and Sichuan. Since then, the network’s hash rate has dropped significantly and is around 50% lower than the previous month. It’s quite interesting that many miners supposedly want to keep their ASICS. They expect the Chinese government to change its mind again.
An incredibly large number of ASIC miners have been shut down. The market for used ASIC miners is just so ‘flooded’ that Bitmain manufacturer was forced to temporarily cease its regular orders.