Bitcoin Mining Gets 16% Easier As Chinese Miners Anticipate Crackdown
As the Chinese government prepares to crack down on Bitcoin mining, the mining difficulty suffers its greatest decrease this year.
- A Chinese government crackdown on Bitcoin mining is scaring off miners.
- The mining difficulty fell by 16%.
Bitcoin’s mining difficulty fell by 16% on Sunday to 21 trillion, the sharpest decrease this year. The correction suggests that Chinese miners are pulling the plug in advance of further crackdowns on mining by the government.
Bitcoin mining difficulty measures how much computer power is required to produce new Bitcoin. The network adjusts the difficulty (roughly) once a fortnight to reflect the level of competition among miners. Lower mining difficulty indicates less competition.
More than 75% of the miners that validate Bitcoin transactions are based in China. Last Friday, the government added Bitcoin mining to a list of industries that required monitoring in order to protect the economy.
Shortly after, Huobi and OKEx restricted Chinese customers from accessing certain services. A spokesperson for Huobi told Decrypt that the restrictions were a response to the government’s remarks. OKEx told Decrypt its restrictions aimed to remain compliant with regulators.
Government sources reportedly told Chinese publication Caixin that the government is worried that crypto will harm uneducated investors, and would prefer to put the electricity and computer chips to use elsewhere.