Business

Bitcoin mining could be easier after cracking down on Chinese cryptocurrencies

The LAN network cable connected to the Bitcoin mining computer server was shot at the Bitminer Factory in Florence, Italy, on April 6, 2018.

Alessandro Bianchi | Reuters

As soon as China cracks down on cryptocurrencies, mining will be much easier and could be more profitable. Bitcoin..

Beijing last month called for steps to eradicate Bitcoin mining amid concerns about environmental impact.This has already brought crypto miners Escape from China for other regions, Like in North America.

China’s crackdown intensified over the weekend, and hydropower-rich Sichuan authorities in China ordered crypto miners to shut down.

According to reports, it is estimated that more than 90% of China’s Bitcoin mining capacity is closed. It is believed that 65% to 75% of Bitcoin mining worldwide is done in China.

It may not be good news for Chinese Bitcoin miners, but others can benefit.

What is Bitcoin Mining?

When thinking about the mining industry, the image of a gold mine with picks and shovels probably comes to mind first. However, Bitcoin mining is not like looking for gold or other precious metals.

Digital currencies are backed by a vast network of computers around the world. In the case of Bitcoin, these computers are competing to solve complex math puzzles to perform transactions. This process also generates new Bitcoins and, if successful, rewards miners with cryptocurrencies.

Currently, miners’ rewards are limited to 6.25 BTC. Previously it was 12.5 BTC, but the total supply of Bitcoin is limited to 21 million, so the amount of Bitcoin rewarding miners is halved about every four years.

Alyse Killeen, founder and managing partner of Bitcoin-focused venture Stillmark, is a “coincidence game” to be the first miner to mine new blocks (basically a list of Bitcoin transactions). Explain that there is.

It’s going to be easy

Following the Beijing crackdown, the total hash rate or processing power of the Bitcoin network seems to have plummeted.

Last month or so, Bitcoin’s hash rate dropped from a record 180.7 million tera-hash per second in mid-May to about 116.2 million as of Wednesday. Did. Blockchain.com data.

Cryptographic experts say that as more Bitcoin miners go offline due to Chinese regulations, the share of other miners in the network will increase and mining could be much more advantageous.

“As more hash rates fall off the network, the difficulty will be adjusted downwards, and hash rates that remain active on the network will receive more for a proportional share of mining rewards,” cryptocurrency said. Kevin Zhang, vice president of mining company Foundry, told CNBC.

on the other hand, Network difficulty The percentage of Bitcoin, which is a measure of the difficulty of mining Bitcoin, rose from over 25 trillion in May to 19.9 trillion last week. There is a time lag in the data as the difficulty of mining is adjusted approximately every two weeks.

“The difficulty of networking decreases with fewer online mining facilities,” Killeen said. This effectively reduces competition with other Bitcoin miners.

However, another major factor in determining the profits of Bitcoin miners is the price of Bitcoin. Bitcoin prices have plummeted from record highs in recent months. Negative comment From Tesla CEO Elon Musk And crackdown on the Chinese industry.

Bitcoin Since reaching a record high of about $ 65,000 in April, its value has almost halved. Cryptocurrencies fell below $ 30,000 on Tuesday, temporarily clearing 2021 profits, but have since recovered and traded above $ 34,000.

Bitcoin mining could be easier after cracking down on Chinese cryptocurrencies

Source link Bitcoin mining could be easier after cracking down on Chinese cryptocurrencies

Back to top button