Bitcoin hash rate hits 8-month low as Chinese miners power down

Bitcoin’s (BTC) hash rate has fallen to its lowest levels since early November as mining operations in China start unplugging.

Bitcoin’s network hash rate, a measure of its computational horsepower, has slumped 46% since its peak level in mid-May. According to Bitinfocharts, Bitcoin’s hash rate is currently 91.2 exahashes per second (EH/s), close to half of its 171.4 EH/s high posted less than six weeks ago.

Bitinfocharts has also reported a drop in mining profitability from a peak of $0.449 per day per terahash per second to current levels of $0.226 over the same period.

Bitcoin’s hash rate has not been this low for eight months, last creeping below 90 EH/s on Nov. 3, 2020. A higher hash rate means greater competition among miners to validate new blocks, which also increases the scale of resources required to perform a 51% attack, thus making the network more secure.

The slump in hash rate and mining profitability is due to the ongoing crackdown from Chinese authorities on Bitcoin mining facilities across the country. Over the weekend, images of major mining pools in China’s Sichuan province being shut down were shared across social media.

We gonna witness a history in bitcoin mining tonight, all mining farms (about 8m kw electricity load) will shutdown at 12pm Beijing time tonight, Harare rate already dropped significantly after sichuan gov announce shut down bitcoins mining farms in Sichuan. pic.twitter.com/xRfqMCgWY1

On Friday, authorities in Ya’an City — a prefecture-level city in the western part of Sichuan — ordered local Bitcoin mining operations to shut down. In late 2019, CoinShares estimated that Sichuan hosted more than half of the global hash rate, attracting miners with its cheap and seasonally abundant hydropower.

On June 12, Yunnan provincial authorities also issued a notice ordering an investigation into the alleged illegal use of electrical power by individuals and companies involved in Bitcoin mining.

According to a CNBC report published June 15, Castle Island Ventures partner Nic Carter noted Bitcoin’s hash rate was dropping, speculating, “It appears likely that installations are being turned off throughout the country.” In early May, Cointelegraph reported that there were already signs that Bitcoin’s hash rate was starting to leave China.

Carter predicted at least half of Bitcoin’s entire hash rate will leave China over time.

North America, particularly the state of Texas, has become one of the top destinations for what has been dubbed the “great mining migration” due to favorable legislation and an abundance of low-cost renewable energy.