Bitcoin has now recovered almost all the hashrate lost during the Chinese mining crisis.
The problems of Bitcoin mining in China
The first symptoms of a crackdown on mining in China were already there in the second half of April, but they only caused a temporary drop in hashrate so that by mid-May, it had already completely receded.
But just between the second half of May and the end of June, the squeeze has been felt, with the Chinese governmental authorities inducing more or less voluntarily many Chinese mining farms to close.
That has led to a real and substantial collapse of hashrate, which, however, now two months later, is recovering.
On the contrary, according to Cryptoquant, since June 28, the hashrate has almost tripled.
In fact, the lowest peak of this collapse has been touched just on June 28. To tell the truth, the hashrate calculation is only an estimate, so different values are available depending on who makes it.
According to what we read on Cryptoquant, the minimum peak on June 28 would have been 52 billion GigaHash/s or 52 ExaHash/s. According to other sources, it would have been 68 Ehash/s, but still much lower than the peak of about 200 Ehash/s on May 13.
Also, according to what we read on Cryptoquant yesterday, the hashrate of Bitcoin mining would have returned to 152 Ehash/s, which is almost three times higher than on June 28. According to other sources, it could be within a range of 142 to 177 Ehash/s.
Bitcoin hashrate now doubles
The fact is that for virtually all sources, yesterday’s hashrate was more than double that of June 28, and still on average, quite close to triple.
Note that this increase in recent days has reduced the block time to less than 10 minutes moreover, at a time when there are never more than 280,000 transactions per day recorded on the Bitcoin blockchain, which is less than the average of 2019 and 2020. However, it is possible that more and more small-amount transactions are being moved off-chain to Lightning Network.
All of that is keeping average fees on BTC transactions below $3, with the median even well below $1. Given that the average transaction value is very high (around $200,000), these are negligible costs. On Lightning Network, on the other hand, the fees are practically insignificant, well below $0.01.
The reasons for the growth of hashrate and Bitcoin’s profitability
The reason for the growth of hashrate is probably due to the rapid rise in profitability of Bitcoin mining, which has gone from $0.17 to $0.46 per day per THash/s. In other words, it has almost tripled since June, on par with hashrate.
However, it must be said that the increase in hashrate eventually reduces profitability, which therefore looks set to drop a bit in the coming weeks unless the value of BTC goes up again.
Note that the current level of Bitcoin mining profitability is at its highest since July 2019.