- The Bitcoin mining difficulty rate has experienced its sharpest one-day drop on record
- The difficulty rate dropped over 15% on Sunday night, with Chinese miners the likely source
- The Chinese government’s imminent crackdown has seen many Chinese Bitcoin mines shut down or relocate
The Bitcoin mining difficulty rate has experienced a second steep drop in six weeks, with preparations for the imminent China Bitcoin mining ban potentially driving the drop. The latest drop, the biggest one day drop in Bitcoin’s history, could be a reflection of miners migrating to areas with more renewable energy sources in the wake of China’s imminent crackdown on Bitcoin mining operations, as revealed earlier this month.
Bitcoin Mining Difficulty Sees Biggest One-day Drop
Having enjoyed a fairly stable 2021, the last two months have seen two severe drops in Bitcoin mining difficulty, both resulting from activity in China. The first drop in mid-April was the result of flooding and the resultant energy blackouts in the mining-heavy Xinjiang region, although by mid-May this shortfall had not just been regained but even exceeded, with mining operations in other parts of the world picking up the slack.
This respite hasn’t lasted long however, with the Bitcoin mining difficulty taking a battering over the past 24 hours following a week or so of stability, with a 15% drop registered on Sunday night alone:
This represents the biggest single day drop in Bitcoin mining difficulty in the cryptocurrency’s history, and, along with an equally large drop in Bitcoin hashrate, is a clear sign that the government’s actions are having an impact, leading to Chinese Bitcoin miners either relocating or shutting down completely.
Chinese Miners Leaving Town
This theory is borne out by reports that some miners have started migrating from Northern Chinese provinces to Sichuan, which is rich in hydro-electricity. However, a lack of rain in e area has forced authorities to limit energy supply to energy-intensive operations like Bitcoin mining, so it will be interesting to see how they respond to an increase in Bitcoin mining activity.
The Bitcoin mining difficulty rate reflects how hard computers have to work to solve the mathematical complications needed to add the next block to the Bitcoin blockchain, with the difficulty increasing as more miners come online. With the number of Bitcoin mining operations increasing globally, such drops will be quickly eaten up by other miners and the numbers will soon pick up again.