China’s stringent crypto regulations meant closing shop for many Chinese businesses within the Bitcoin (BTC) mining ecosystem. The sudden disappearance of Bitcoin miners from the grid has resulted in falling hash rates. The hashing performance, the cumulative computing power of the Bitcoin network, dropped from an all-time high of 180 exahashes per second (EH/s) to 84 EH/s in just 21 days.
While the hash rate drop was directly attributable to the drop in the number of Chinese miners, Blockchain.com Explorer data suggests there has been a steady increase in mining difficulty since June 3.
Since the drop, the hash rate has increased by 21.38%, owing to the return of the migrating Chinese miners that have started operating in other regions. The resulting adjustment in Bitcoin mining difficulty translates into higher computational costs. As more of the formerly China-based miners come back online, the operational costs for Bitcoin miners worldwide will continue to increase.
Given the initial resistance from the Chinese government, miners have been on the lookout for countries that offers both regulatory clarity and lower electricity costs.
Under the pretext of shielding citizens from high-risk investments, Chinese authorities have forced crypto businesses to highly limit their crypto portfolio offerings or move offshore. Wang Juana, a member of China’s OECD Blockchain Expert Policy Advisory Board, stated:
“We are seeing the cryptocurrency market enter a path to ‘de-China-isation’ — first on trading and now on computing power, based on a series of stronger steps taken against cryptocurrencies and Bitcoin mining last week by Beijing.”
At its peak in September 2019, China contributed to 75.53% of the global Bitcoin hash rate and had shown a steady decline way before the mining ban was imposed. While China’s current hash rate contribution stands at 46.04%, the United States has expanded its share to 16.85% globally.