- China’s recent crackdown on mining and cryptocurrency trading has led companies to cease operations in the country.
- Bitcoin’s mining difficulty takes its biggest hit this year, a 16% decline.
- Adjusting the difficulty means that it takes longer to produce each block on the BTC network.
Bitcoin mining difficulty dropped dramatically over the weekend, marking the biggest drop this year. Mining companies in China have been withdrawing their operations from the country as Beijing has stepped up its crackdown on cryptocurrencies.
Chinese miners anticipate crackdown
The difficulty of mining Bitcoin, which measures how much computer power is needed to produce a new coin, was significantly reduced by 16% on May 30. The network adjusts the difficulty once every two weeks to reflect the level of competition among miners. The recent decline indicates that there is less competition.
More than 75% of miners who validate Bitcoin transactions are based in China. However, the Chinese government has called for a “severe” crackdown on and punishment of “illegal securities activities,” including mining and cryptocurrency trading.
Beijing cited the rationale behind the new measures to contain risks and ensure financial stability.. Shortly after the announcement, the cryptocurrency market witnessed bloodshed and saw a double-digit drop in the prices of digital assets.
Several crypto mining companies and exchanges began to halt their operations in China, including Huobi, the world’s second-largest cryptocurrency exchange by volume. The company stated that it had suspended mining hosting services and the sale of Bitcoin mining machines.
Huobi is the eighth largest mining pool, contributing 4% of the world’s Bitcoin hash rate. While the company will stop selling cryptocurrency mining machines in China, it would seek to expand abroad.
BTC.TOP, a mining pool that allows pools to work together and mine Bitcoin, has announced that it will suspend operations in China due to regulatory concerns. Founder Jiang Zhuoer stated that his company would relocate to North America, given the recent crackdown.
While Beijing’s anti-crypto stance is nothing new, China has not banned crypto mining in the past.
According to a Chinese publication, Government officials believe that cryptocurrencies could harm uneducated investors and that mining is of no use to the real economy. In the Inner Mongolia autonomous region, state officials have already started cracking down on mining activities and are reportedly considering adding Bitcoin miners to social credit blacklists.
While the difficulty of mining the leading cryptocurrency was reduced, the adjustment also increased the average time of block production. The production of a block takes almost four minutes longer today than on May 13, when the average time required for the production of blocks averaged around 8 minutes and 14 seconds.
.
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
