The recent decision of the Chinese government to ban all crypto mining operations noticeably affected the global crypto community. For the most part, negative consequences are notable in Bitcoin and Ethereum networks.
The main argument for this decision by China is the necessity of the nation to save electricity and focus on a “greener” economy with a strong emphasis on renewable sources of energy.
Just a week before the ban, peak values for Bitcoin and Ethereum hash rates were 198 EH/s and 643 TH/s respectively. Unfortunately, the downslope is dramatic and consistent. Since the enactment of the ban, total mining volumes have been dropping all across the board. By the end of June, the hash rate of the BTC network was reduced by 70% and dipped below 58 EH/s while Ethereum lost about 30%.
The source of energy is one of the most obvious bottlenecks in creating more computational resources. China is a leader in the world’s energy production and produces about 27.8% of global electricity. The government of the nation believes that any surplus should be used to improve heavy industries such as metallurgy.
The estimated number of ASIC devices disconnected from the network is about 5 million. Recovering such losses accounting for about 70% of the world’s total hash rate seems nearly impossible. Since other countries do not have enough energy to spare and redirect to mining efforts, searching for a new “central” mining hub is a tall task.
At the moment, the vast majority of farmers who expressed a desire to move their farms outside Chines borders are accepted by Kazakhstan and the US but it is definitely not enough. The deficit of computational power affected crypto prices as well.