The Chinese crackdown on bitcoin (BTC) miners continues. Several Chinese provinces banned mining altogether or indirectly made mining impossible by cutting off the electricity. While this may sound bad, we now see the resilience of the Bitcoin network in full action. On top of that, this is an excellent opportunity for smaller miners.
China bans mining; Bitcoin doesn’t care
China has always been somewhat of a hostile country for crypto. The government always kept a close eye on the nascent industry and banned cryptocurrency exchanges already a couple of years back. We have heard multiple FUD (fear, uncertainty, doubt) stories about China banning Bitcoin altogether or only mining in the past years. However, these bans never really went into practice like we see happen right now.
The hash rate is seeing the most significant correction ever in absolute numbers. Since its all-time high of 180 million terahashes per second (TH/s), the hash rate has dropped back to 107 million TH/s. Thus, after a long uptrend, the network is now being hit hard by the Chinese mining ban. But is it as bad as it sounds?
Two things might be of interest to smaller bitcoin miners and Bitcoin fans in general. Firstly, for a long time, Chinese miners generated a majority of the Bitcoin hash rate. This was worrisome to some experts and analysts as the network seemed to be somewhat centralized. However, that problem seems to now solve itself, as you can see in the following developments.
BTC.com, a mining company and mining pool, recently was notified by the Chinese hydropower company that its data center would no longer receive electricity. Was it the end of BTC.com? No, the company behind it instead decided to move part of its operation to Kazakhstan. The mobility of bitcoin mining is beautifully brought into practice here. Bitcoin doesn’t care if a government doesn’t like it. The miners will simply move away.
Another big name in the mining world, Canaan, is also starting to mine in Kazakhstan. Together with Europe and North America, Kazakhstan seems to be an attractive destination for Chinese miners being forced to stop mining in China.
An opportunity for the smaller miner
With the hash rate declining, the difficulty is also declining. This automatic mechanism makes sure that the competition among bitcoin miners stays fair and sufficient. Simply put, mining bitcoin becomes easier to make sure the network keeps producing blocks. The declining difficulty is one reason why the current developments are attractive for smaller miners.
They now have the opportunity to start mining and earn more. The expectation is that many miners will grab this chance and that the hash rate will soon increase again. The hash rate will likely also start growing once the Chinese miners finished relocating their machines and start mining again. Are you interested in mining? Visit our store and discover our collection of the best crypto miners in the world!