06.12.2021

The profitability of Bitcoin mining rises after the attack of the Chinese government

A few months after the Chinese government launched a full-scale campaign against Bitcoin miners in their country, the profitability of mining the main cryptocurrency began to rise markedly again.

Recall that in May, mining companies from China, located in several provinces at once, were forced to transfer their activities to other regions of the world due to a complete ban on the part of government agencies. This event negatively affected the price and hashrate of Bitcoin, but after almost three months the cryptoindustry is “coming to its senses” again.

According to a new report from analysts at Arcane Research, the average daily income from BTC mining has grown by 10 percent, or $ 4.3 million over the past week. At the same time, the average daily income from commissions alone on the Bitcoin network rose by 22 percent, or $ 118 thousand .

A local trend towards the growth of these indicators has been observed for several weeks – this conclusion was published by the experts of the YCharts service.

Is it profitable to mine Bitcoin now?

On June 27, the daily profitability of BTC mining was $ 13 million, but on August 17, this figure rose to $ 48 million. That is, for almost two months, the increase in the indicator amounted to $ 35 million .

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Dynamics of the daily profitability of mining BTC over the past few months

Another important trend was noted in the Glassnode Insights report. Here is a quote from analysts in which they share their findings on the situation. The cue is from Decrypt.

With the recalculation of difficulty after the Great Migration, the income of miners who remained on the network increased by 57 percent per hash in BTC equivalent. Now this figure is reaching 8.8 BTC per exahesh.

Great migration in this context is the transfer of their capacities by Chinese miners to other regions of the world. The massive disconnection of their equipment from the network has caused one of the largest drops in the difficulty of mining bitcoins. Recall that this is a parameter of the cryptocurrency network, with the help of which the block mining time is fixed in a zone of ten minutes, regardless of the total computing power of the miners’ devices. Thus, the rate of release of bitcoins is at approximately the same level.

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Mining profitability in the equivalent of mined bitcoins

In mid-June, the Chinese government also ordered the country’s banks to end any financial relationship with miners. According to sources, the combination of all these factors led to a decrease in hash rate by more than 50 percent, since before that China remained the country with the highest concentration of mining companies.

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Falling hashrate of Bitcoin

Due to the high difficulty, Bitcoin mining has a very high entry threshold in terms of starting capital equivalent. However, you can mine altcoins with at least one video card – the 2Miners pool will help here. Calculate the potential profitability of the process in the state of the calculator 2CryptoCalc, and in this chat you will be helped with the assembly of your own crypto farm.

The Chinese government’s policy has been positive for all miners outside of China itself. According to the leading analyst of Blockchain Solutions Will Clemente, during this time, the volume of BTC production has grown significantly in other regions of the world. Here’s a quote from him on Twitter.

Less competition = more profitability in BTC for those miners who were still online.

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Local growth of BTC

It is for this reason that in the past five weeks the miners have not sold the accumulated bitcoins, Clemente is sure. To prove his point, he published a graph of the Glassnode analytical platform, which displays the relative outflows and inflows of BTC on the wallets of mining companies.

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Growing accumulation of coins by miners

Another reason is the decline in the value of Bitcoin. The price of the cryptocurrency has fallen below $ 30 thousand this summer, although in April it reached an all-time high of $ 64 thousand. It was simply not profitable for miners to sell BTC at such prices, so they chose to accumulate coins until the next wave of growth. And their strategy turned out to be correct – over the past month, the value of Bitcoin has grown by about $ 17,000 .

As the price rises, the complexity of mining also grows, as more and more Chinese miners are gradually finding new places for their activities, notes Glassnode.

Over the past two months, the hash rate has grown by about 25 percent from the minimum.

Recall that the difficulty changes every 2016 blocks depending on the hash rate, so the faster the mining companies “expelled” from China connect their equipment to the network, the faster the profitability of mining in the equivalent of mined BTC per day will decrease for everyone else. But profitability in dollar terms, on the contrary, can continue to grow with the Bitcoin bull run.

We believe that the aggression by the Chinese government ultimately benefited Bitcoin’s reputation. The cryptocurrency has proven its ability to adapt to new conditions and discourage bizarre government initiatives. In addition, the situation once again reminded that trying to interfere with the work of a decentralized network with hundreds of thousands of users is useless – it simply will not work.

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