After the fierce Chinese crackdown on Bitcoin mining activity, the effects of this are starting to become apparent, with the hash rate dropping to an annual low of less than 72 AH/sec.
This comes just days before the next difficulty adjustment, which is expected to be one of the biggest in Bitcoin history.
Bitcoin hash rate drops to yearly lows:
The world’s most populous country decided to intensify its hostile actions against the cryptocurrency industry in May this year when it chased down bitcoin mining activity.
Since the Asian country was responsible for more than 60% of the mining, it was inevitable that the network would suffer when the miners began to migrate, especially after the Chinese authorities ordered several regions to stop mining activities.
Within weeks, the metric hash rate shown above that represents the total computational power that was put into the largest blockchain began to drop sharply.
Some reports have even indicated that the creation of new bitcoins may slow because of this.
What will happen to the bitcoin network?
When the Bitcoin network was created, perhaps the anonymous person or group named “Satoshi Nakamoto” predicted such a rapid drop in the hash rate.
So to protect the system, Satoshi has implemented a procedure that can eventually help invoke the difficulty adjustment.
The difficulty adjustment is basically a feature that occurs in every 2016 block (about two weeks) and makes it harder or easier for miners to do their job.
In extreme cases like now, mining becomes easier, which means that the network hash rate will soon recover even if the number of miners does not increase.
There are some analyzes that believe that a lower Bitcoin hash rate is beneficial, as the number of Bitcoin miners will be less, which is incorrect as the usual process of mining the usual number of Bitcoins continues normally with a delay of a few seconds or minutes, as the network adjusts itself and the mining process becomes easier and thus mining remains 6.25 bitcoins in a block at a rate of 144 bitcoins per day.
Back in May – when the Chinese government launched its crackdown on mining – the difficulty dropped from 25 to 21 trillion.
It went through another negative adjustment two weeks later, and it is estimated that there is more to come.
The data on the series shows that the next stage should take place in about four days and should reduce the difficulty by more than 23% to 15T.
If it does so, it will be the largest negative difficulty adjustment in BTC history.
On the more positive side, recent reports have confirmed that a small number of Chinese miners have prepared to move to countries such as Kazakhstan and the United States.
Thus, they can return to putting their computers to work on the Bitcoin blockchain soon.
But until then, the network will readjust itself to become more powerful.