Mining difficulty for Bitcoin has seen a record drop following China’s suppression of cryptocurrency mining. On July 3, it was adjusted by dropping 27.9% to account for the reduced computing power of the crypto-mining network.
This is the third subsequent drop in difficulty after it was reduced by 16% on May 29 and 5.3% on June 14.
Mining profitability is expected to rise by 35%.
Bitcoin is programmed to account for mining difficulty depending on the processing capabilities of the network. While Chinese miners struggle, other miners will see significant gains in their mining profits.
“We are expecting a period of much higher mining profitability for Compass Mining clients,” said Whit Gibbs, the founder and CEO of a Bitcoin mining service provider, Compass. “We expect miners to be approximately 35% more profitable.”
Furthermore, analysts agree with the founder of Blockcap, Darin Feinstein, that there are further benefits for the Bitcoin network.
“We are expecting a revenue and profit increase for the foreseeable future. This was an unexpected gift to the network, not just on revenues but on decentralisation and sustainable energy metrics,” Feinstein said.
The cryptocurrency mining industry in China was a multi-billion dollar business, and miners now have to look for new locations for their operations or sell their hardware abroad. One of the largest manufacturers of ASIC miners, Bitmain has stopped its sales temporarily in June after a plunge of 75% in the price of its top-tier mining hardware.
“(Overseas) mining sites are not built overnight, and selling pressure is huge in the secondary market,” stated Bitmain in an announcement on its website.
Between May 14 and July 3, the total hash rate of the Bitcoin network dropped by 53.1%.
The mining difficulty of Bitcoin adjusts every 2016 blocks, which take, on average, two weeks to mine. Since its inception, this is the most significant difficulty drop that the Bitcoin network has had. Previous significant decreases happened on the 31st of October 2011 (18%) and on the 3rd November 2020 (16.1%).
Patrons of the best online casino establishments using Bitcoin don’t need to worry about the Chinese crackdown on cryptocurrency mining. The latest events won’t impact their gaming experience since the global Bitcoin network has plenty of miners outside of China maintaining network security and verifying BTC transactions.