Thanks to China, Bitcoin mining is both easier and more profitable

Tram Ho

The world will have to see half of the Bitcoin mines closed due to China’s policy of banning mining and trading of virtual currencies. And now that that’s happening, Bitcoin’s algorithm has automatically adjusted to not cause a chain crash.

The correction on Saturday caused Bitcoin mining difficulty to decrease by 28% from the last adjustment, while the total hashrate (hashrate) decreased by 54%. That means the rest of the pie is more for the persistent miners to stay.

Bitcoin Mining Easier Than Ever

A Bitcoin miner will run a piece of software to jointly solve a problem presented by the system. The completion of the solving process is recorded by a block posted to the network and the Bitcoin reward system for miners. All are updated on the decentralized ledger when miners join to confirm this.

China has long dominated such mining systems, estimated to hold between 65-75% of the worldwide hashrate. But in the crackdown on virtual currency mining since mid-May, China has forced miners to shut down, indirectly causing the total global hashrate to drop by 50% from its peak.

Nhờ Trung Quốc, đào Bitcoin vừa dễ lại có lãi nhiều hơn - Ảnh 1.
Bitcoin mining difficulty has now decreased by 28%, three consecutive drops bringing the difficulty to 14T from the peak of 25T in mid-May.

Fewer miners means fewer blocks solved. This forces the Bitcoin network to recalculate the difficulty every 2016 blocks or about two weeks. On Saturday (July 3), Bitcoin mining difficulty dropped 28% to an all-time low.

Less competition and reduced difficulty mean that any miner still running will reap substantial profits. Assuming electricity is fixed, the miner’s revenue per day is about 29 USD compared to 22 USD before.

In the long-term, while a miner’s earnings can fluctuate with Bitcoin’s price, their revenue is only down about 17% from when Bitcoin peaked in mid-April, according to Kevin Zhang, former mining director at the Greenridge Generation mine in the United States.

“We expect a higher return for our clients, which we expect is 35% more profit,” said Whit Gibbs, CEO of US mining provider Compass.

Despite the overall decrease in difficulty, only the most modern miners achieve the highest returns. Blockcap miner founder Darin Feinstein said that most of the miners in China are old inefficient and have lower profit margins.

Waiting for change

It is difficult to predict how long this will last. Observers say it is entirely possible that Beijing will reverse its policy and mines will return to China.

Otherwise, most experts agree that it will take 6-15 months to bring the mines to their new location. CEO Whit Gibbs believes that miners will still enjoy increased revenue for at least the rest of 2021.

Nhờ Trung Quốc, đào Bitcoin vừa dễ lại có lãi nhiều hơn - Ảnh 2.

The US benefits a lot when China cracks down on Bitcoin mining.

The problem is that before China pulled out the mining power, the infrastructure for setting up Bitcoin mines was very poor. And when the market is flooded with virtual currency miners, many countries have difficulty receiving machines because there are no factories, containers and sufficient power supply.

One trend that occurs is that miners are attracted to capital flows from the US and accept to start from scratch. However, analysts expect that not only large factories, but also Americans are attracted by mining virtual currency in garages.

By the morning of July 5, the Bitcoin price fluctuated around $34,000 with a total market capitalization of approximately $1,437 billion.

According to CNBC

Share the news now

Source : Genk