Bitcoin hashrate suffers massive drop as China continues to crack down on BTC mining
|- Chinese authorities have cut power to mining farms in the Sichuan province over the weekend.
- The southwest region of Sichuan has become the fifth province in the country to announce a crackdown on Bitcoin mining.
- The mining difficulty of Bitcoin is expecting a record drop of over 11%.
China has continued to crack down on cryptocurrencies as Sichuan ordered energy companies to stop providing power to 26 Bitcoin mining farms in the region.
Sichuan shuts down Bitcoin mining
After a meeting between China’s Science & Technology Bureau and the Sichuan Ya’an Energy Bureau, Bitcoin miners in the region were informed that they must cease operations by June 25.
Sichuan, a region in the southwest of China, has been popular among Bitcoin mining farms due to the abundance of cheap hydroelectricity produced during the rainy season, which lasts for up to five months during the summer.
Power companies in the province notified miners that they would be closed until further notice. Energy firms were required to cut the power by the start of June 20.
Since China started to toughen its stance on cryptocurrencies, Bitcoin price has been in decline, suffering from its worst crash.
The southwest region has become the fifth province in the country that has announced a crackdown on crypto mining farms. In May, China’s State Council added crypto mining to its list of financial risks that required monitoring, despite having banned digital assets since 2017.
Shortly following the announcement, provinces including Inner Mongolia, Xinjiang, Qinghai and Yunnan also discouraged and banned Bitcoin mining.
While the rainy season draws miners to the Sichuan province, miners migrate to Xinjiang for the rest of the year, where they rely on coal-powered energy sources when the weather cools down.
According to the Cambridge Center for Alternative Finance, China accounts for over 65% of the Bitcoin network’s hashrate. Following Sichuan’s new development in halting mining operations, mining power backing Bitcoin fell almost 17%.
In comparison, the power outage in Xinjiang that occurred in April led to a Bitcoin hash rate decline of 30%, provoking a $10,000 drop in BTC price.
According to BTC.com data, Bitcoin mining difficulty is expected to record an 11.2% drop. Bitcoin mining difficulty, which measures how hard it is for miners to create a new block on the blockchain, already witnessed two negative adjustments in the past month, as it dropped from 25.046 trillion to 19.932 trillion.
It is essential to note that when the leading cryptocurrency has logged three consecutive negative difficulty adjustments in a row, the market has seen a massive drop in digital asset prices. At the time in December 2018, miners were even switching off their equipment, given the rapid fall in prices.
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