Miners turn off Equipment. What is the Reason?
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Miners turn off equipment. What is the reason?
Over the past month, the main cryptocurrency has fallen in price by 36%. Bitxmi experts explained how this could be related to the decrease in the amount of computing power that is used to service the digital coin network.
In the second half of May, a 27% decrease in the hash rate of the bitcoin network was recorded. On May 13, the hashrate of the main cryptocurrency network was 171 EH/s, according to Bitinfocharts. On May 30, this figure fell to 124 EH/s. Why has the bitcoin network hash rate decreased, and will it be able to recover in the near future?
Why did the bitcoin hash rate start to fall?
The decrease in the hashrate of the bitcoin network was triggered by the collapse of the cryptocurrency market, which occurred on May 19, BitXmi experts are sure. Quotes still have not recovered from this drop, and because of this, some of the computing power that was used in bitcoin mining was switched to other cryptocurrencies or turned off altogether, depending on the costs incurred by the miner.
After the collapse of the crypto market quotations, which occurred on May 19, bitcoin is trading in the range of $ 32-40 thousand. On May 31, the cost of the first cryptocurrency on the Bitxmi crypto exchange is $ 36.7 thousand. The capitalization of the digital coin 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. 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, BitXmi experts explain.
China and possible restrictions
The overall hash rate of the bitcoin network began to decline due to calls from the Chinese authorities to introduce new restrictions on cryptocurrencies. 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.
Earlier, Vice Premier of the State Council of the People’s Republic of China Liu He announced the need to take measures against the extraction of digital assets and crypto trading. Later, the Chinese government news agency Xinhua published an article “Let’s urgently eliminate the hype and chaos around virtual currencies,” which highlighted 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 Huobi 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 15.
The drop in the hash rate could have been affected by the unfavorable weather situation in the heart of Chinese mining – the Sichuan province, experts say. 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 hydroelectric power station is less than expected, and the one that is generated goes primarily to enterprises in other industries. Miners in China always receive electricity on a residual basis – this is the position of the Chinese authorities.
A sharp recovery and further growth in the overall hash rate in the coming months is unlikely to happen, according to BitXmi experts. In the next 3-6 months, this indicator will be in the corridor 120-180 EH / s. It should be understood that hash rate fluctuations are an ongoing process that depends on the market situation. Experts predict that in June this year the hash rate will be adjusted and grow.
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