The price has had a small revival this week where we exceeded 30,000 euros per bitcoin, but at the time of writing we are trading just below that. The main event this week has obviously been the biggest difficulty adjustment in bitcoin history. Difficulty for miners has fallen by 27.94 percent after China launched a witch hunt against the country’s bitcoin miners.
China’s attack on the network is the ultimate proof of bitcoin’s resilience, and so far the protocol does exactly what we’d expect. Bitcoin just makes a block every ten minutes and transactions are still processed. All of this is happening while about 50 percent of all mining hardware is looking for a new home to strengthen the network again at a later time. Time to take a look at some on-chain mining statistics to better understand what is going on with bitcoin.
https://www.youtube.com/watch?v=Wi0c1_zO18g
Slowest Blocks Since 2009
The past week has been a period of tremendous volatility for the mining industry as China’s mining ban impacted the network. A significant portion of the hashing power has been temporarily disabled, which has reduced the rate at which blocks are found to an all-time low. At one point, it took an average of 32.6 minutes before a new block was found. A block time that we haven’t seen since the year 2009.
Fortunately, this extremely slow block time was only short-lived and we went to an average of 800 to 900 seconds per block pretty soon after. Which is still a lot slower than the target of 600 seconds per block.
Source: Glassnode
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In the Glassnode chart you can see that we have had the slowest average block time since 2009 during this period. The last time we were around this level in block time was after the 2017 crash with an average block time of 1,774.5 seconds. For novice bitcoiners, these kinds of events are a good way to learn how the bitcoin protocol works and adapt to the new situation.
Turnover of remaining miners gets boost
The Chinese witch hunt against the miners is not bad news for everyone, because for the remaining 50 percent of the miners, it obviously means more bitcoin. Although the total turnover that miners are allowed to divide among themselves has fallen considerably, miners that are still active are relatively warm. In April, bitcoin traded around the record price and miners were allowed to distribute between 40 and 50 million euros on average.
Now lies the bitcoin price about 50 percent lower, but at the same time the hash rate has decreased by 38 to 49 percent, as the Chinese competition was forced to cease operations. The average total turnover of miners is currently between 21 and 25 million euros. In that regard, the mining industry has little to complain about at the moment.
It will be interesting to see what will happen to the mining equipment from China. It is expected that the miners will be put back to work in the foreseeable future, but no one knows exactly what is going on. Another scenario to consider is that China is currently collecting all miners to put them to work itself. In any case, the coming months are going to be important for the mining industry.
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