Under Regulatory Pressure: Bitcoin Arithmetic Drops 35% Daily, Domestic Mining Pools Reshuffle, Mining Industry Now Moving Offshore

China’s arithmetic isn’t falling, it’s moving.

On June 28, bitcoin arithmetic plummeted from 108 EH/s (1 EH = 18 times 10 hashes) to 69 EH/s in one day, a drop of nearly 35%, one of the biggest drops since the birth of the bitcoin network. According to BTC.com, the current network-wide arithmetic power is 89.68 EH/s, and the mining difficulty is expected to drop by about 24.97% again on July 3.

Bitcoin Arithmetic Drops to Year’s Lowest Under Regulatory Pressure

Bitcoin arithmetic, the amount of work required to secure the Bitcoin network.

Since mid-May, Bitcoin’s average daily network arithmetic has been on a significant downward trend, dropping to 69 EH/s on June 28, a six-month low and a daily decline of nearly 35%. This is a decline of 84.2% from the yearly peak of 180.63 EH/s set on May 13, and it is also the longest continuous decline this year.

It’s worth noting that intra-day arithmetic records are not always reliable, and the 35% drop could reach lower numbers in a few days.

The plunge in arithmetic power is affecting the running of Bitcoin transaction confirmation times. According to data collected by Trustnodes, the Bitcoin network generated only 77 blocks on the 28th, compared to about 144 blocks per day previously. Fewer blocks means that the average block-out time has lengthened.

The Bitcoin difficulty adjustment is designed to ensure a balance of computing power for smoother block-out times. With fewer miners mining, the arithmetic power drops accordingly. According to BTC.com’s estimates, this adjustment will occur on July 3, and the difficulty will drop by 24.97%. If it is higher than this percentage and conditions remain the same, this will be one of the largest difficulty downgrades in the history of the Bitcoin blockchain.

Analysis suggests that this big drop in bitcoin computing power may have been caused by China’s recent full-scale call on cryptocurrency mining operations.

Several key provinces in the bitcoin mining industry (Inner Mongolia, Sichuan, Yunnan and Xinjiang) have issued mining bans and important mining sites have been shut down as a result. While most miners are expected to relocate to other regions, the exodus will be slow and painful.

Even though countries like El Salvador, Kazakhstan and cities like Miami offer incentives for miners from China, the relocation of bitcoin mining sites is not an easy task. Thousands of ASICS miners have to be shipped out, power facilities need to be adjusted and reviewed, and official permits have to be obtained. As a result, it is widely believed that the drop in computing power will continue for some time until miners complete their relocation.

Domestic mining pools may be reshuffled

Some bitcoin mining pools for Chinese miners have also seen a sharp drop in hash rates due to regulatory policies, and the pools may be facing a reshuffle.

The major bitcoin mining pools in China include AntPool, Coinmark, F2Pool, BTC.com, Firecoin, OKEx, and others.

From the arithmetic power distribution of the major mining pools, ViaBTC and F2Pool, Poolin are the three mining pools with the highest arithmetic power share, reaching 16.3% and 12.8% respectively, as of June 30 before press time. In addition, AntPool and Binance Pool both have more than 10% share.

The combined power share of these five mining pools has reached 64% of the entire network, with several of the pools’ main power coming from China. As a result of the recent tightening of domestic mining regulations, there is a clear divergence in the power shares of different pools.

BTC.com’s market share fell from 10.1% to 5.8%, a 4.3% decrease. Among exchange mining pools, Huobi.pool’s share has also fallen from 2.5% to 1.2%. Binance Pool and OKExPool, on the other hand, saw their shares increase rather than decrease. As the chart shows, Binance Pool’s share rose from 9.8% to 11.6%, and its ranking rose from sixth to fourth, while OKExPool’s share increased slightly, from 0.9% to 2.3%. The biggest beneficiary was ViaBTC, which increased its market share from 11.5% to 16.3%, leaping to become the mining pool with the largest share of China’s computing power.

Analysts believe that it remains to be seen whether this policy adjustment will have an impact on the domestic mining pool landscape. Some mining pools have recently seen a significant drop in their share of computing power, probably because they are more dependent on the supply of computing power from a certain region, which happens to have tightened its local regulatory policies. Mining pools such as ViaBTC, F2Pool and Poolin are still able to occupy the head, or because they cooperate with more overseas mining resources and may also be more risk-resistant.

Mining industry has gone overseas

Meanwhile, the cryptocurrency mining industry dominated by the Chinese market is also moving overseas, and there is a trend of global distribution.

In terms of mining machine sales, for example, the head miners are trying to go overseas. on June 1, Zhang Nangan, the chairman of Jia Nan Technology, said that as of May 31, 2021, Jia Nan had outstanding total orders for more than 149,000 mining machines, and had signed purchase orders for more than 10,000 mining machines with both Mawson, a US-listed company, and Genesis, an international mining giant, with more than 1,000 orders There are 29 customers with orders of more than 1,000 units. In addition, Jia Nan said it will launch its own mining in Kazakhstan in early June. According to the first quarter 2021 financial report released by Karnan Technology, the company’s revenue from overseas markets accounted for 78.4% of total revenue in the first quarter of 2021, compared to 4.9% in the same period of 2020.

Bitmain also said on the 23rd that Bitmain’s spot miners will be discontinued globally in the near future and only forward small-currency and Bitcoin supercomputing servers will be available for sale for the time being. At the Bitmain customer information session, Bitmain emphasized that “the company will continue to work with its customers to find other high-quality power resources, especially clean energy power. Customers have already started to match each other with overseas power and mining resources. In response to possible mining machine maintenance problems, Bitmain has launched the HUB warehouse service, which is expected to compress overseas mining machine maintenance time from three weeks to four days.”

For his part, Jiang Zhuoer, founder of Lepit Mining Pool, plans to move his miners to Texas and Tennessee. With its abundant and cheap power resources, the state of Texarkana seems to be becoming a favored new place for Chinese miners to reside. Companies such as Bitmain, Blockcap, Argo Blockchain and Great American mining have also previously ‘set up shop’ in the state.

In the face of immediate regulation, Edward Evenson from SlushPool Mining Pool recently said in a media interview that he has recently been contacted by 300-400MW of bitcoin miners seeking to place machines in certain parts of North America and the EU, with others preparing to ship machines to Kazakhstan. Another Xinjiang (mostly coal-powered) machine will be moved to nearby areas in Central Asia. New machines sent from Bitmain and MicroBT will be shipped to North America. Machines going to North America will typically seek traditional data centers at cheap “all-inclusive” hosting rates, as is customary in China.

With this in mind, China’s computing power is not declining, it’s moving. In the future, bitcoin computing power will become more widely distributed globally.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/under-regulatory-pressure-bitcoin-arithmetic-drops-35-daily-domestic-mining-pools-reshuffle-mining-industry-now-moving-offshore/
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