Bitcoin price started crashing down as Chinese authorities announced a massive crackdown on the Sichuan region last weekend. Reportedly, 90% of the BTC mining machines have been shut down post this crackdown.
Since November 2020, the Bitcoin (BTC) hashrate has dropped to its lowest levels as Chinese crypto miners suspended operations. Last week, Chinese authorities announced their crackdown on Sichuan province while shutting down all operations in this region.
After hitting its peak levels last month in mid-May 2021, the BTC hashrate has dropped by a massive 46%. As per data on BitInfoCharts, the Bitcoin network hashrate has dropped to 91.21 Ehashes per second. The last time, the BTC hashrate was at these levels was on November 3, 2020.
At the same time, the Bitcoin mining profitability has collapsed from the highs of $0.449 USD per day per terahash per second to current levels of $0.226. A higher hashrate means higher competition among miners. Moreover, it also means higher network security and greater resilience against 51% of attacks on the Bitcoin network.
With the latest news about the Chinese crackdown on the Sichuan province, the Bitcoin price has come under severe pressure over the weekend. In the last 24-hours, Bitcoin has lost another 8% crashing under $33,000 levels. At press time, Bitcoin is trading at $32,359 with a market cap of $606 billion.
Chinese Crackdown and BTC Hashrate Drop
After hitting its all-time high last month, the bitcoin hashrate has corrected massively. The Chinese authorities have been going hard after Bitcoin mining facilities in the country. Over the last weekend, a number of Chinese Bitcoin miners shared images of shutting own their mining rigs.
Many Chinese miners are reposting this video, and some of them are crying. The 24-hour average hashrate has fallen below 110E. https://t.co/3B30CljIac pic.twitter.com/4DcrZ4jBK0
— Wu Blockchain (@WuBlockchain) June 19, 2021
Citing this recent and fast drop in the Bitcoin hashrate, Castle Island Ventures partner Nic Carter stated: “it appears likely that installations are being turned off throughout the country.”
Interestingly, Chinese authorities have been arguing that Bitcoin mining operations consume massive levels of coal-based electric power. Thus, the crackdown has been to limit the carbon footprint from such mining operations. However, the crackdown in the Sichuan province suggests a different story.
Sichuan has a large production of hydroelectric power at a low cost. This is precisely the reason miners move to Sichuan during the rainy season. The latest crackdown suggests that Chinese authorities will clamp any sort of Bitcoin mining activity irrespective of the source of energy used. Speaking to Reuters, Winston Ma, NYU Law School adjunct professor said:
“Renewable power does not help. The four largest mining regions – Inner Mongolia, Xinjiang, Yunnan and Sichuan – have implemented similar crackdown measures, even though mining in the latter two is mostly based on hydropower, whereas the first two are on coal”.
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