After strong mining regulation: demand for on-chain transactions drops to 34-month low, global head mining pools resilient to risk

In terms of the overall trend, the number of on-chain transactions fell this year, but arithmetic power still rose slightly. This relative change means that the short-term arithmetic power decline may have less impact on the actual operation of the network than expected.

Analyst | Carol

Editor | Tong

According to the Electricity Consumption Index calculated by the University of Cambridge’s Centre for Research in Emerging Finance, the estimated annual energy consumption of bitcoin mining as of June 21 was about 91.04 TW/h, which is already higher than the estimated energy consumption of Finland and Belgium as a whole, and comparable to the estimated energy consumption of Kazakhstan as a whole. The high energy consumption not only puts pressure on energy demand, but also has an environmental impact due to high carbon emissions.

Against this backdrop, and in conjunction with its goals of carbon neutrality and carbon peaking, the Chinese government has recently strengthened its regulatory policy for the bitcoin mining industry. On June 20, Bitcoin’s network-wide arithmetic dropped to 91EH/s, a new six-month low, and PAData further analyzed the recent changes in Bitcoin’s arithmetic and on-chain data and found that.

1) The average daily bitcoin network-wide arithmetic power has dropped significantly in the last month, by about 28.53%, with the average daily arithmetic power in June dropping to the lowest in the year, but still higher than any month in the last three years.

2) The arithmetic share of mining pools with a Chinese background has been mixed, with some declining significantly, such as 1THash, Huobi.pool, and F2Pool’s average arithmetic share in the recent week all declined by more than 40% compared to last month’s average arithmetic share, but BTC.com and Binance Pool still saw growth of more than 10%, and ViaBTC grew by more than 56%.

3) Bitcoin mining difficulty has been lowered 3 times since May due to the drop in arithmetic power, the most frequent short-term downward adjustment in the last three years.

4) The bitcoin network has recently seen a significant increase in time out of blocks, with an average increase of 1.96% in the first 4 months of the year, while the increase so far in June has reached 5.29%. At the same time, the average monthly block-out volume of the Bitcoin network has fallen to its lowest value since November 2018.

5) Bitcoin’s on-chain activity is currently significantly lower, with the number of on-chain transactions dropping to the lowest level since August 2018. However, the overall trend shows that while the number of on-chain transactions has fallen this year, arithmetic power has still risen slightly, and this relative change means that short-term arithmetic power declines may have less of an impact on the actual operation of the network than expected.

Average Arithmetic Power Drops to Lowest of the Year This Month, with Mixed Arithmetic Power Share Across Mining Pools

Since mid-May, Bitcoin’s network-wide average daily power has been on a significant downward trend, and on June 15, it fell to 129.10 EH/s, down 28.53% from its peak of 180.63 EH/s on May 13, and the longest continuous decline this year. As of June 20, Bitcoin’s network-wide arithmetic dropped to 91 EH/s, a new low of nearly six months.

As of June 20, bitcoin’s network-wide arithmetic power fell to 91 EH/s, a six-month low. The average monthly arithmetic power in June has fallen to 140.20 EH/s, the lowest of the year, and down 13.08% from the previous month. However, in terms of historical average monthly power levels, this month’s power is still higher than any other month in the last 3 years, which means it is still at a historically high power level.

In terms of the distribution of computing power of major mining pools, as of June 17, AntPool and ViaBTC are the two mining pools with the highest computing power shares, reaching 15.66% and 14.76% respectively. In addition, Poolin, BTC.com and Binance Pool also have a share of more than 10%.

The combined share of computing power of these five major mining pools has reached 62.77% of the entire network, with several of the pools’ major computing power coming from China. As a result of the Chinese government’s recent tightening of mining regulation policies, there is a clear divergence in the power shares of different mining pools.

Even for pools with Chinese backgrounds, there were mixed results. Some pools have seen significant decreases in their recent share, and these pools may be more dependent on the supply of arithmetic from a region that happens to have tightened local regulatory policies, such as 1THash, Huobi.pool, and F2Pool, which all saw their average share drop by more than 40% in recent weeks compared to last month’s average share. However, some mining pools have seen recent growth in share, such as BTC.com and Binance Pool, which both saw increases of more than 10%, and ViaBTC, which saw an increase of more than 56%.

The share of overseas pools, such as Foundry USA and SlushPool, increased by 19.41% and 27.55% respectively, which is a significant increase.

However, from the mid-term change in the arithmetic power of each pool, the average arithmetic power share in May this year compared to the average arithmetic power share in January remained positive for only four pools, namely AntPool, ViaBTC, Poolin and Foundry USA, while the other six pools in the statistical scope had different degrees of decline.

Whether this policy adjustment will have an impact on the pattern of domestic mining pools needs to be further observed, but from the recent week’s power share change, the head mining pools may be more resistant to risk due to the cooperation of more overseas mining resources, the top three mining pools, AntPool and Poolin’s power share is a small drop, while ViaBTC but also a significant increase.

Block-out time extended to 11.55 minutes, monthly average block-out hit a new low since 2019

The mining difficulty was also adjusted downward after the network-wide drop in arithmetic power. According to statistics, as of June 17, the cumulative difficulty of the Bitcoin network was adjusted 12 times this year, including 8 upward adjustments and 4 downward adjustments. And three of the four downward adjustments occurred in the last month or so, respectively, on May 12, 12.61% down, May 30, 15.97% down, June 14, 5.30% down, the recent is also the most frequent and largest mining difficulty short-term downward adjustment in the last three years.

Also affected by the drop in computing power, the bitcoin network has recently seen an increase in block-out speed. on June 15, the bitcoin network’s block-out interval (MA7) was about 11.55 minutes, up 5.29% from the beginning of the month, the longest block-out interval of the year. And in fact, the bitcoin network’s outgoing block speed has slowed significantly since May, with the May outgoing block interval rising by about 3.88%. Prior to that, the average monthly increase in the bitcoin network’s block-out interval was only 1.96% for the first four months of the year.

On the other hand, the bitcoin network’s block-out volume is also declining. As of June 15, the average daily block volume for the month was only 135.20 blocks, down about 5.24% from the previous month. In terms of historical block-out volume, this month’s average daily block-out volume hit its lowest since November 2018.

The average block size of the Bitcoin network has also dropped significantly recently, with the average block size this month being around 1,224.8 KB as of June 15, with the lowest average daily block size being just 926.5 KB. Prior to this month, the average block size remained largely stable, fluctuating around 1,290 KB or less.

Chain activity is significantly lower, with the monthly average number of transactions hitting a 34-month low

As can be seen, the short-term drop in arithmetic power has already had an impact on some other indications of the Bitcoin network. However, the impact of the arithmetic decline on the actual operation of the network is likely to be less than expected, as usage demand is also decreasing significantly.

According to statistics, as of June 15, the average daily number of bitcoin on-chain transactions this month was about 227,500, down about 9.43% sequentially, while the overall decline for the year reached 29.98%. In terms of historical data, the average daily on-chain transactions this month hit a 34-month low since August 2018. Bitcoin network activity has seen a more significant decline recently.

In terms of the overall trend, as of June 15, the Bitcoin network’s arithmetic power still shows an overall growth trend this year, and even if arithmetic power will still continue to fall in the short term due to policy, then the overall trend of arithmetic power this year is at most a small decline. However, the downward trend in the number of transactions on the bitcoin chain over the same period is much more pronounced. This relative change either means that current arithmetic is still able to meet the demand for on-chain transactions, or it means that some of the non-essential or non-immediate transaction demand is being consolidated, allowing on-chain transaction demand to adapt to the change in arithmetic. But in either case, the Bitcoin network is currently operating normally overall.

And, even with the recent drop in arithmetic power, shutdowns and retirements have significantly impacted miners’ income. But in general, bitcoin arithmetic has risen less than the price of the currency over the same period so far this year. With stable power prices, this means that as of June 15, bitcoin miners have been earning excess returns this year.

These excess returns may provide the material basis for miners to weather the immediate difficulties. However, if the policy continues to be high pressure and miners are blocked from “going abroad” or can’t survive in the country, we can’t rule out the possibility that the market will face a big sell-off from miners in the medium to long term.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/after-strong-mining-regulation-demand-for-on-chain-transactions-drops-to-34-month-low-global-head-mining-pools-resilient-to-risk/
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