Amid China’s crackdown on its miners, and after a historic decline in mining difficulties, Bitcoin (BTC) miners are now generating much higher returns. In addition, there is a significant increase in hash rate and a decrease in block time.

Hence, China’s actions resulted in most of the country’s BTC mining centers closing, causing the profitability of Bitcoin mining to skyrocket.

Profitability leaps in Bitcoin mining

Profitability leaps in Bitcoin mining

Bitcoin mining profits (7-day moving average) increased 31% in the five days from July 2nd to July 7th. This brings them back to mid-May levels when earnings plummeted 46% in 17 days. In mid-May, BTC was still trading at around $ 50,000; today it is below $ 33,000.

Since the beginning of this year, mining profits are up 47%.

Meanwhile, the hashrate, or processing power, of the Bitcoin network decreased almost continuously between May 14th and July 3rd, decreasing 54% over that period. Since then, it’s been up 8% over the past four days. The hashrate has decreased by 36% since the beginning of 2021.

Even if the Bitcoin network is aiming for a block time of 10 minutes, it recently reached its highest level since 2009 at over 17 minutes (simple 7-day moving average). Since then it has decreased by 27% to 12.5 minutes.

These changes come after the greatest decrease in mining difficulty in the network’s history. It fell nearly 28% to 14.36 T five days ago, a level not seen since early June 2020.

This slump follows China’s crackdown on cryptocurrencies and mining, which has had a massive impact on bitcoin miners across the country, including major provinces, where several large miners have been forced to close their businesses.

Quantum Economics founder Mati Greenspan said the difficulty adjustment is a lagging indicator, and “what we are seeing is that the Bitcoin network is correcting itself to lose China’s hash power”.

Or as Jeff Dorman, Chief Investment Officer (CIO) of the US investment management company Arca, remarked after “very coordinated reluctance from China and the subsequent mass exodus” of the miners, the hashing and block rates drop significantly – fewer machines than with Online mining for BTC, “so there is less competition for rewards for solving a complex and random puzzle.” However, this means that returns are likely to increase for those who can still mine. “

This also significantly reduces the mining difficulty, “which means that it becomes easier and more profitable to solve this random puzzle, which stimulates newbies to mine and thus more speed.” Blocks will increase as puzzles are solved faster among the others and new miners. “

According to Dorman, old miners will likely “reappear” within a few weeks of the move, which will further increase the hash rate, as well as competition and difficulty rates.

However, this will be unlikely in July, according to Thomas Heller, Compass Mining’s chief business officer, as Chinese miners worry about data center capacity and logistics, Reuters reports. They have to clean and pack their machines, ship them overseas, clear them, then install them – and all that after they have found a suitable place with agencies that are more pleasantly responsible, with low temperatures and cheap electricity, “ideally surplus”. Energy from hydropower plants or oil fields would be wasted “

And all of this will be even more difficult for smaller miners if they manage to move.

Join our Facebook group and Telegram group Coincu News to chat with more than 10,000 other people and share information about the crypto currency market.

Important NOTE: All content on the website is for informational purposes only and does not constitute investment advice. Your money, the choice is yours.