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Bitcoin Hashrate Drops to 6 1/2-Month Low After China Mining Crackdown

The Bitcoin network's processing power could rebound if miners relocate to other locales, one analyst predicts.

Jun 16, 2021 at 7:30 p.m. UTC
Updated Sep 14, 2021 at 1:12 p.m. UTC

The Bitcoin hashrate – the total computational power used to secure transactions on the blockchain – has dropped to its lowest level since November, possibly a reflection of China's recent crackdown on cryptocurrency mining amid concerns over the network's energy consumption.

The seven-day average hashrate slid to 129.1 exahashes per second on Tuesday, well off the all-time high of 180.6 million exahashes per second in mid-May, according to data from Glassnode. It's still up from 105.6 exahashes per second a year ago.

A higher hashrate means more resources devoted to processing transactions on the blockchain and greater resilience to attacks.

China’s Xinjiang Uygur Autonomous Region, the Inner Mongolia Autonomous Region and Qinghai province last week announced plans to shut down some or all bitcoin mines. Yunnan province said it would crack down on illegal operations, and officials in Sichuan province, another crypto mining hub, are in talks to determine regulations.

China-based 1THash, one of the world’s 15 largest mining pools, lost approximately 70% of its hashrate last week, according to Compass Mining Memo, citing data from MiningPoolStats.

However, some analysts predict that the drop in the Bitcoin hashrate will be reversed eventually as some miners leave China for other locales.

“Zooming out, the size and rate of the latest decrease is consistent with other previous drops,” wrote Zack Voell, content director at Compass Mining. “After machines shuffle around the map and hash power relocates to new regions, the steady growth of Bitcoin’s hashrate should resume.”

CORRECTION (June 28, 18:02 UTC): This article has been corrected to show that the hashrate slid to 129.1 exahashes per second, not 129.1 million exahashes as previously reported.

DISCLOSURE

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