Over the past month, the main cryptocurrency –Bitcoin– has fallen in price by 36%. Experts explained how this could be related to a decrease in the amount of computing power that is used to service the digital coin network.
After the collapse of the cryptocurrency market, which occurred on May 19, bitcoin is trading in the range of $ 32-40 thousand. As of May 31, the cost of the first cryptocurrency on the Binance crypto exchange is $ 36.8 thousand. The digital coin capitalization, according to CoinGecko, is $ 690 billion.
The list of miners‘ expenses includes not only electricity, but also renting a room with a cooling system, as well as servicing, Roman Nekrasov explained. If we are talking about not particularly energy-efficient computers, then electricity costs are quite high, which means that in the event of a serious drop in the bitcoin rate, it may be more profitable for the miner to disconnect the mining equipment from the outlet or switch it to mining other cryptocurrencies, the expert explained.
China and possible restrictions
The overall hashrate of the bitcoin network began to decline due to calls from the Chinese authorities to introduce new restrictions on cryptocurrencies, says Jahon Khabilov, CEO of the Sigmapool mining pool. According to him, miners began to turn off equipment and move ASIC devices outside the country, and now almost all mining farms in Kazakhstan are filled or reserved for miners from China, a similar situation is observed at industrial sites in Russian Siberia.
Previously, the need to take action against the production of digital assets and kriptotreydinga said Vice-Premier of the State Council of China Liu He. Later, the Chinese government news agency Xinhua published an article “Urgently Eliminate the Hype and Chaos around Virtual Currency,” which high lighted four risks associated with trading and using cryptocurrencies: market, transactional, technological and legal.
Against the backdrop of statements from the Chinese authorities, miners began to leave China. The suspension of work was reported by BTC.TOP and HashCow. Crypto exchange Huboi announced that it has stopped serving customers from China. A similar decision was made by the Bybit crypto exchange, which will stop serving users from China from June 15th.
The drop in the hash rate could have been affected by the unfavorable weather situation in the heart of Chinese mining – the Sichuan province, added Roman Nekrasov. He recalled that there are many mining enterprises in this region that are powered by hydroelectric power plants. This year, May turned out to be dry, everyone is waiting for rain, respectively, the electricity generated at the hydro electric power station is less than expected, and the one that is generated goes primarily to enterprises in other industries, said the co-founder of the LAZM data center.
“Miners in China have always received electricity on a residual basis – this is the position of the Chinese authorities,” the expert emphasized.
Industry Outlook
A sharp recovery and further growth in the overall hash rate in the coming months is unlikely to happen, Jahon Khabilov said. In his opinion, in the next 3-6 months this indicator will be in the corridor 120-180 EH / s. It is necessary to understand that hash rate fluctuations are an ongoing process that depends on the market situation, explained Roman Nekrasov. He predicts that in June this year the hash rate will be adjusted and grow.