The amount of computing power used to mine the first cryptocurrency exceeded 100 Eh / s after falling by more than 50% in June this year. How long will it take to relocate Chinese miners to other countries and how will it affect quotes?
The amount of computing power used to mine Bitcoin has begun to recover from the largest decline in history. Chinese miners who are leaving the PRC en masse are already commissioning equipment in other countries. According to BitInfoCharts, as of July 29, 19:00 Moscow time, Bitcoin hashrate is 104 Eh / s (exahashes).
The company BIT Mining, a few weeks ago that operated data centers in Xinjiang, Qinghai and Sichuan, has already put into operation more than 3 thousand ASIC miners transported from China to Kazakhstan. Another 4,000 devices have arrived at the company's facilities in Kazakhstan and are awaiting installation. Also, BIT Mining announced the purchase of an additional 2.5 thousand miners, which will be delivered to facilities in Kazakhstan within a week.
At the end of June, the bitcoin hash rate fell by more than 50% and reached 65 Eh / s (exahashes) for the first time since November 2019. This happened when miners started leaving China en masse after the introduction of a ban on cryptocurrency mining. Initially, restrictions were introduced in five provinces, then they were extended to the entire territory of the PRC.
The relocation of mining production is proceeding at a very accelerated pace, says Roman Nekrasov, co-founder of the ENCRY Foundation. He recalled that relocation is not only the transportation of equipment, but also the selection of the site, the recruitment of personnel and their training, the full procedure for registering a legal entity and other bureaucratic procedures. According to Nekrasov, at best, these processes can be completed in three months.
“I think that the hashrate of the Bitcoin network is unlikely to recover before the end of September, and more likely sometime in October-November. But I do not think that the process will require waiting for the onset of the new 2022, ”the expert predicted.
By reducing the network hash rate, Bitcoin mining has become a little more profitable, which means that already operating farms can increase their capacity in order to seize the moment, and this will lead to an increase in the hash rate, added Nekrasov.
Now we are seeing a small but stable hash rate growth, said Ivan Sharov, CEO of the online store for mining equipment and computer components Hardvar.ru. In his opinion, the bitcoin hash rate is unlikely to return to its previous values earlier than the end of this year due to logistical problems of miners from China, since moving to another country, as well as commissioning a huge amount of equipment, is not a quick process.
How hashrate affects the market
Over the past week, bitcoin has risen in price by 25%, but this growth should not be associated with the restoration of the hash rate, the co-founder of the ENCRY Foundation is sure. According to him, the hashrate and network complexity indirectly affect the quotes, but they cannot provoke sharp jumps in the rate.
In general, the higher the network hash rate, the higher the cost of mining bitcoin, Nekrasov explained. With the growth of the hashrate, the cost of mining cryptocurrency rises and in such conditions miners prefer not to sell the mined coins, since the current rate seems to them too low, the expert emphasized.
“When miners keep the coins in their possession, then there is an imbalance in supply and demand in the market, and this contributes to the growth of the rate. But I repeat – this does not provoke a sharp surge, ”added Nekrasov.