Several on-chain data sites estimate that Bitcoin’s mining difficulty will experience a drop of around 21% in its next adjustment which is expected to occur at block 689,472, or due in about five days from the time of the press. It would be the biggest drop in difficulty ever in Bitcoin’s history, and it will also be the first time the network has seen drop in difficulty three times in a row since December 2018. The difficulty measure has dropped by 16% and 5% on May 30 and June 14, respectively.
Bitcoin mining difficulty is designed to adjust all blocks of 2016 based on the total hash rate running on the network throughout the blocks of 2016. The average hash power securing the world’s largest blockchain by Market cap has fallen from 142 exahashs per second (EH / s) on June 14 to just under 100 EH / s now.
The amount of hash power deployed on the network determines the time it takes to produce blocks – a process that is supposed to take 10 minutes according to network rules. If the production of blocks becomes faster than 10 minutes, the network will increase the difficulty. On the other hand, if many miners go offline, the block production time will increase and the network will ease the difficulties.
The average block production interval on the Bitcoin network since its previous adjustment on June 14 is approximately 12.9 minutes, almost 30% slower than the expected interval of 10 minutes per block.
The overall difficulty and drop in hash rate since the start of the month reflects the scale of mining farm shutdown orders issued by the Chinese governments of Xinjiang and Sichuan, which until recently were the two main mining centers in the world. .
Bitcoin miners who are still plugged in and unaffected by China’s regulatory situation will see a larger share – as the difficulty decreases – of their mining rewards after the next adjustment.
Millions of ASIC miners disconnected
Since the provincial governments of Xinjiang and Sichuan gave orders to cut off the electricity supply to bitcoin mining farms – on June 9 and 18, respectively – the hash rate of the network has dropped by around 70 EH / s. It’s down almost 50% of its total over the past month.
It also means that millions of Bitcoin ASIC miners have been disconnected from the network and are now looking to change hands or are waiting to be moved elsewhere. There is currently a growing supply in the used miners market which has even prompted Bitmain to suspend global sales for cash orders.
The hash rate on the Ethereum network has also taken a hit, falling 20% since the start of the month.
Meanwhile, mining farms outside of China are already an influx of new miners after regulatory footwear fell in Xinjiang and Sichuan.
“The surge in demands for our renewable energy colocation services following the sudden global interest in green bitcoin mining has become even stronger following the Chinese government’s announcements of crackdowns on mining,” said Igor Runets, founder and CEO of Russia-based bitcoin hosting provider BitRiver.
Runets said that shortly after the Sichuan government order, BitRiver signed Chinese mining customers for 150 megawatts of hosting capacity that will be fully functional in four months. But he believes the current shortage of available accommodation globally will make it difficult to meet the new demand from Chinese miners anytime soon.
Indeed, in Xinjiang alone, bitcoin miners which until June 9 were operating at a combined capacity of nearly 2,000 megawatts have been forced to shut down.
“Considering the shortage of hosting space for bitcoin miners and the time it takes to build new mining facilities or deploy new machines, I don’t think the hash rate will recover anytime soon.” , Runets said.
He added, “Moreover, from conversations with our partners in China, we believe that many miners in China own the machines that were turned off until the 100th anniversary of the Chinese Communist Party in the hope that the government can reverse its anti-mine policy. “
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