Experts say that China’s mining shock may not be over yet

Earlier this year, the Chinese government took a major move to prohibit any crypto mining business in its territory, resulting in Massive outflow of hashing power — As of June 23, 168 exa hashes per second (EH/s) to nearly 86 EH/s, a drop of nearly 40% — From China to neighboring countries.

As a quick review, hash rate refers to the total computing power required to obtain a single bitcoin (Bitcoin). In other words, one can say that although the central bank issues fiat currency, miners get new bitcoins, which are used to solve complex mathematical codes called blocks.

Before the ban, China claimed to own 65% of the world’s total Bitcoin computing power. However, since the above actions, a large number of mining pool operators have packed their bags and headed to greener pastures.In one example, the Canadian mining company Bitfarms pointed out that its revenue Increase The second quarter of 2021 increased by nearly 30% from the previous quarter. Compared with the previous quarter, the BTC mined by the company increased by 26% compared with the previous quarter.

What happened?

After months of turbulence, the hash rate level of BTC now seems to have stabilized again, and the number seems to be back to the level it was a few months ago. in this regard, data Data provided by cryptographic analysis company CryptoQuant indicates that this indicator seems to be reappearing Summit 150 Exahashes is marked as 152 EH/s, which is three times the level reached on June 28 (52 EH/s).

It is also worth mentioning that on May 13, the average computing power of Bitcoin soared to a record high of 197.6 EH/s, but due to the fact that mining machines across China are facing “large immigration.” In other words, with this indicator now Close to the level in early June, it is expected that a new historical high may appear in the next few months.

Kevin Zhang, vice president of business development at the crypto mining company Foundry, provided his views on the matter. He told Cointelegraph that although people thought the situation had recovered, things were still far from “returning to normal”, adding that the 152 EH/s The reading is based on a short 24-hour hash rate estimation window, the luck of the entire network is high, and the block resolution is faster than expected, adding:

“Currently, the 24-hour moving average of the hash rate is again hovering around 130EH/s, which is consistent with its 3-day and 7-day moving averages. The hash rate of BTC is definitely recovering and returning to normal. However, most ( If not all) large miners displaced by the crackdown in China will either ship their mining fleets abroad or store them until they find open hosting capabilities.”

He further emphasized that, as far as the current situation is concerned, the entire world is still limited by existing infrastructure that can support all displaced mining units to help maintain the difficulty of Bitcoin hashing.

“It is of course exciting to see the hash rate coming online, many of which come from the final delivery of new orders. By the end of this year, we are likely to hit a record high in terms of network difficulty and hash rate,” Zhang finally said.

The impact of the Chinese ban will continue

Philip Salter, chief technology officer of Bitcoin mining company Genesis Digital Assets, told Cointelegraph that many Chinese miners continue to insist that the situation in China improves or may wait for an attractive opportunity to transfer overseas.

However, he added that most large mines have been acquired during 2021, and there is no ability to deploy 5-8 GW of mining machines in the short term, which basically means that the situation has not really reached any level. There are practical solutions. Salt added:

“So, the situation is not over yet, I think we will see the impact of China’s mining outflow in at least a year. Maybe most of the mining hardware will reappear sooner or later, and the hash rate will recover. But we need to wait and see Will it happen slowly over time, or will panic-driven hardware sales cause market prices to fall.”

Similarly, the founder and CEO of mining company BitRiver Igor Rugnets told Cointelegraph that although BTC’s hash rate numbers are bound to rebound-because previously ordered machines continue to be delivered to their international buyers-he still believes that, Most offline machines have yet to find a home abroad due to the suppression in China.

In the technical note, Rugnets pointed out that in the weeks following the crackdown, Bitcoin’s total hash rate lost more than 6 billion computing power. Considering that most of these mining machines are not the latest generation of machines, he believes that a total of 750,000 machines are likely to be offline due to the strike.

Finally, in Rugnets’ view, as previously ordered machines continue to be shipped by manufacturers, Bitcoin’s hash rate will continue to rise. In addition, he pointed out that the hash rate of each machine of these new mining machines is approximately eight times higher than that of the older generation machines that previously dominated the Chinese market. “Bitcoin’s hash rate may even hit a record high before the end of the year,” he said.

North American mining companies come forward

According to the data released by the Cambridge Power Index, the U.S. mining pool has been launched Mop up Even before June, most of BTC’s hash rate had already appeared, when China’s local ban had not even fully taken effect. In this regard, Riot, a mining company headquartered in the United States, Reported mining-related income of $31.5 million During the three-month period-it increased by more than 1,500% from its revenue of $1.9 million in the second quarter of 2020.

The company also reported that compared with the previous quarter, the total number of bitcoins it can mine has increased by 38%, generating 675 BTC, compared to 491 BTC in the first quarter.In fact, fist recently Initiated a $650 million 400 MW expansion project In cooperation with Whinstone US, four additional power generation facilities are currently under construction.

Other North American mining companies that have achieved amazing growth so far this year include Marathon (268%), Bitfarms (210%), Riot (126%) and Hut8 (180%). Not only that, the data shows that the aforementioned companies were able to produce 58% more Bitcoin in July than in June.

Fred Thiel, CEO of Marathon Digital Holdings, commented on his company’s recent performance disclose In the second quarter of this year, the company’s revenue increased by 220% compared to the previous quarter (to nearly 30 million U.S. dollars). In addition, the company’s hash rate has also increased by 196% during the aforementioned time window.

Therefore, it will be interesting to see how Bitcoin’s hash rate recovers from now on, especially as more and more companies around the world increase their production capacity.