Bitcoin network takes a major hit on all fronts following China’s sustained clampdown
Amid China’s unwavering clampdown on cryptocurrencies, several key Bitcoin stats have dropped to previous lows.
Total Hash Rate, Miner Revenue, and Network Difficulty plunges
As of July 17, the total hast rate of the Bitcoin network had plunged to 101.58M terahashes per second (TH/s). The last time this figure was this low was in June 2020. Meanwhile, two weeks earlier, the network’s total hash rate dropped to 2019 levels, according to data on Blockchain.com.
Similarly, mining revenue has also fallen to 2020 levels. Miners reportedly earned $28.58 million on July 17, representing an almost 70 percent drop from its all-time high of $80.17 million on April 15, 2021. While mining revenue appears to have crashed, it is now relatively easier to mine Bitcoin.
The Bitcoin network difficulty, which is a measure of how hard it is to mine a new block on the Bitcoin blockchain, has been on the decline since late May.
For some context, a high network difficulty means that it would require more computational power to mine the same amount of blocks. On the flip side, a low network difficulty suggests that miners would be able to find new blocks faster. The network’s difficulty level is adjusted every 2016 blocks (approximately every two weeks) to ensure that the average time between each block is 10 minutes.
Bitcoin’s difficulty adjustment is directly linked to the total estimated mining power, aka the total hash rate. Consequently, as the network’s hash rate has continued to drop over the past few weeks, Bitcoin’s mining difficulty has also followed suit.
As reported by BTC PEERS, China’s Financial Stability and Development Committee (FSDC) disclosed its plans to clamp down on Bitcoin mining and trading activities in the country. The news generated a lot of uncertainty amongst crypto investors, particularly Chinese miners. Amid the cloud of uncertainty that was created by the announcement, the price of Bitcoin crashed to nearly $30,000.
Since late May, when the news broke, China has moved to shut down several crypto mining operations. It is estimated that about 90% of Chinese miners have gone offline. Meanwhile, a handful of major mining firms have closed shop and are relocating to more crypto-friendly regions. Nonetheless, the impact of China’s latest anti-crypto stance is still very much in effect and may last a little longer.
Bitcoin transactions are now cheaper
One of the good things about the market slump is that sending Bitcoin is now relatively cheaper. In April, the average transaction fee of the Bitcoin network rose to a peak value of nearly $60. However, as of July 16, this value had dropped to $2.45.
At peak demand seasons, the Bitcoin network typically becomes congested, with thousands of unconfirmed transactions. Transaction fees also spike following the increased pressure on the network. With Bitcoin currently trading at around $30,000, it appears the demand for the leading cryptocurrency has subsided. There have also been some predictions that the digital asset might drop as low as $10,000.