The May ban on cryptocurrency mining in China caused a sharp drop in an extremely important BTC indicator called hashrate, which expresses the total computing power spent on BTC mining. However, it seems that in the coming weeks the hashrate may definitely recover from this decline and create new historical highs.
Shortly before China’s May ban on cryptocurrency mining in May, BTC’s Hashrate reached unsurpassed levels. According to the blockchain.com portal, it had the highest measured value 198.5TH / s On April 15, at a time when Chinese miners accounted for more than 50% of BTC mining (estimates say up to 65%). At seven-day average had the highest values just in May around 180 TH / s.
After the Chinese ban, the hashrate fell sharply
After the mining ban in China, the hashrate immediately fell by about 50% to a minimum on June 27, when it was at 58.46 TH / s. The seven-day average at that time fell below 90 TH / s.
The collapse of the hashrate made BTC mining less secure and theoretically more susceptible to 51% of attacks (although even at the time of the lowest hashrate, this type of attack was not at all likely).
It is generally stated that if the hashrate increases, it is a very strong bull signal for the whole BTC, and conversely, if the hashrate decreases, it means that the miners do not show enough interest in BTC. The hashrate is associated with energy consumption, which is costly, and miners make efforts to extract BTC only if it is advantageous for them or they expect the price of BTC to go up significantly. However, the situation in China was specific because the miners were interested in continuing their activities but were expelled from their environment.
BTC has survived the crisis and is stronger
With the passage of months, it is already clear that BTC has emerged from this crisis and will emerge from it even stronger than before. The Chinese miners, who decided to continue their business, sold some of their Bitcoin to finance the relocation of their mining hardware abroad (this could affect the price of BTC, especially in May). It is clear from the recent figures that they are doing well and that miners from other countries are joining them with more vigor, as evidenced by the large investments made by companies in the purchase of new mining hardware.
These days, BTC’s Hashrate is almost at the level measured in May 2021 before the mining ban in China. According to blockchain.com, the hashrate was measured at around 177 TH / s on October 2, numbers similar to those in May. With a seven-day average, it is still at around 145 TH / s, which is comparable to the figures from April this year before the miners in China had to shut down their machines.
Update: it seems like this was some kind of spike and that we are hovering around 140 exahashes – not quite back to ATHs, but a massive V shaped recovery from the bottom. Miners expect BTC to crush previous ATHs in coming months as non-China hashrate continues to grow
– Alex Gladstein @ ⚡ (@gladstein) October 3, 2021
Mining is more decentralized
On the plus side, the hashrate is slowly approaching historical highs, in addition to the much more decentralized redistribution of BTC mining worldwide compared to the May 2021 figures. BTC. At present, its share is far from being so dominant, which means that BTC is more decentralized in this direction as well. In other words, China has not only failed to stop BTC in this regard, but it seems that it has even helped it in addition to what it itself has lost its partial “power” over this cryptocurrency.