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- As August approaches, mining for Bitcoin is going to get more challenging
- Since its dramatic drop in June, Bitcoin’s hash rate, which determines the overall processing power required to produce a coin, has risen by a stunning 15%
- Miners who went out of China in quest of greener pastures are spearheading the comeback
Outside of China, Bitcoin miners have reaped the benefits of the currency’s lower difficulty. However, as more miners return online and the race to be first heats up, the thrill ride may be nearing an end. Bitcoin’s mining difficulty is expected to rise as August begins, according to the weekly newsletter of US-based mining business Luxor. They expect next week’s adjustment to being positive, with an approximately 1.75 percent gain, for the first time since China’s hash rate went dark, according to the research.
The hash rate of Bitcoin has already increased
Bitcoin momentarily broke beyond the $40,000 barrier at 11:30 a.m. Indian Standard Time (IST) on July 27, registering a one-day gain of more than 7% — a welcome relief for investors expecting a recovery from the cryptocurrency’s $30,000 rut after correcting its mid-April top of more than $60,000. However, after its catastrophic drop in June, Bitcoin’s hash rate, which determines the total computational power required to generate a Bitcoin, has grown by a remarkable 15% and now stands at around 100M terahashes per second (TH/s).
The difficulty of mining a block of Bitcoin increases as the hash rate rises. Because more miners are attempting to unlock a block at the same time, Bitcoin’s built-in algorithm automatically makes it more difficult to unlock a block. The method aids in the control of coin supply and prevents an influx of too many coins. It’s a good sign for the community since it implies the network is recovering from its downfall. Individual miners, on the other hand, will be disappointed because they will have to spend more time mining a coin than before.
Chinese miners are resurrecting
Short-sellers departed the market, and traders got confidence after a burst of positive news from crypto stalwarts, making the last three months a hard ride for Bitcoin and all other cryptocurrencies. China’s crackdown, on the other hand, has had a far greater impact.
The return of Chinese miners will be the primary cause of the difficulty increase. Most of them have sought new homes in other countries, set up their rigs, and have no plans to go offline unless their region is hit by another regulatory crackdown. The increase in the hash rate indicates that the massive miner relocation effort is beginning to pay off. Miners have begun to remove their equipment from China and are actively resuming operations on the other side of the globe, with the majority of them appearing in the United States. It’s a place where renewable energy is abundant and government laws are uncomplicated.
Prior to the shutdown, China contributed up to 65 percent of Bitcoin’s total hash rate. The dramatic reduction was caused by the migration of miners. The hash rate is expected to steadily recover in the following weeks as miners gradually return to the network.
What’s driving Bitcoin’s price increase?
The rise in the number of individuals mining Bitcoin isn’t the only reason for the cryptocurrency’s price breaking out of the $30,000 rut. The initial push came when Amazon announced that it was exploring accepting Bitcoin payments. The e-commerce behemoth could be aggressively studying the space, according to a job listing and confirmation from a source. The corporation has since rejected the report, but it was enough to send the crypto markets into a frenzy.
The government’s position is seen positively by the greater crypto community, as rules imply standardization. Regularisation initiatives are at least a means for cryptocurrencies to live with the current financial system at a time when nations like China are toeing the line of an outright ban. Tesla CEO Elon Musk indicated around the same time that the electric vehicle manufacturer would most likely accept Bitcoin as payment if cryptocurrency mining is fueled by 50% or more green energy.
Experts are optimistic about the future, given the miners’ attempts to migrate to the United States. Bitcoin’s Achilles heel has always been energy usage, and China’s crackdown could end up being a boon in the long run.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
