The mining crisis in China is having serious repercussions on the price of bitcoin.
Indeed, China is launching a real attack against decentralized cryptocurrencies such as bitcoin, probably due to the fact that they do not fit in well with an authoritarian regime that does not tolerate too much freedom for its citizens.
In fact, decentralized cryptocurrencies are not in fact controllable by the state, and essentially provide those who use them with total financial freedom that can hardly be tolerated by authoritarian states.
In particular, the mining collapse in China is due to the decision to force the closure of mining farms.
To tell the truth, the Chinese state has tolerated bitcoin mining in the country for years, but it is only very recently that it has launched a real war that is beginning to take its toll.
The consequences of China’s policies on bitcoin mining
In fact, according to data estimated and published by CoinWarz, the Bitcoin hashrate has gone from an all-time high of 191 EH/s on 2 June to the current 99 EH/s in just a few weeks, almost halving from its peak at the beginning of the month.
To be fair, 191 EH/s had already been reached on 9 May, after a quick recovery from the 17 April crash, again caused by China. But then the descent stopped at 117 EH/s, although a week was enough to recover the previous levels.
This time is different, not only because the hashrate has fallen to levels not seen since October 2020, but also because it has been this low for three days now.
In fact, the block time has risen to 13 minutes, compared to the average 10 minutes, while profitability is not rising significantly due to the falling price of BTC. Right now, profitability has fallen back to the levels of early February, but is still significantly higher than a year ago, for example.
These difficulties have thrown some pessimism into the markets, so much so that the price of bitcoin has fallen again to close to $31,000, a level only slightly above the low peak of 19 May.
However, the price of BTC has been consistently above $30,000 since 3 January, as it has never fallen below this level since then.
In addition, several Chinese miners have stated that they are making plans to move elsewhere, so it is possible that over the next few weeks, or perhaps months, Bitcoin’s hashrate will return to high levels, particularly if the price recovers and profitability increases.