Bitcoin shot up in the first months of 2021 before tumbling in May.
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- Bitcoin’s “network difficulty,” which measures how much computing power is needed to mint a new bitcoin, has plummeted.
- The clear culprit is China, where the government’s anti-crypto tack has forced mining operations to shutter.
- Network difficulty could bounce back as Chinese miners migrate elsewhere.
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Bitcoin’s “network difficulty,” which measures how much computing power is needed to mint a new bitcoin, has fallen 45% from its May highs, according to public blockchain data. The drop is smaller but still pronounced, about 26%, when using 30-day moving averages.
Bitcoin’s network difficulty falling sharply
Bitcoin’s underlying algorithm regularly adjusts difficulty based on how many miners are on the network. Falling difficulty indicates mining power has come offline.
The clear culprit is China, where the government’s anti-crypto tack has forced mining operations to shutter from Sichuan to Xinjiang.
The country, which once accounted for 65% of the world’s mining power, has forced a “seismic shift” in bitcoin mining patterns. In the wake of China’s restrictions, nearly a quarter of active bitcoin addresses went offline, according to analytics firm Glassnode. In the end, 90% of China’s bitcoin mining capacity is set to be shut down, according to the Global Times, a newspaper run by China’s Communist Party.
“It’s happening! Texas will be the crypto leader,” tweeted Gov. Greg Abbott after a local grocery chain said it would start accepting crypto at kiosks. The tweet came just days before China tightened the screws on crypto mining.Previous