This fall in hash rate can be attributed to China’s regulatory policies with regard to mining activities. Owing to the environmental and economic impact of cryptocurrency mining and transactions, China has shut down multiple mining plants. This forced many mining pools to move out of China, causing a drop in the hash rate of Bitcoin.
Twitter user @SinoCrypto expressed worry about the falling hash rate:
Although we were already expecting 90% of China’s #bitcoin mining hashrate to be coming offline, it’s still crazy to see it playing out in front of us… https://t.co/6yfNeUiTEB pic.twitter.com/53aMnNP76V — Kevin Zhang (@SinoCrypto) June 28, 2021
Meanwhile, the network will be witnessing one of the largest drops in mining difficulty in an upcoming adjustment. This metric determines the difficulty Bitcoin miners face in solving the cryptographic puzzle to mine new blocks. Data from BTC.com suggested that the mining difficulty was set to drop by 23.37% in four days at the block height of 689,472.
This could be the largest difficulty drop ever seen in BTC history and will also be the third consecutive difficulty fall ever noted on the network since 2018. The last two adjustments were 5.30% and 15.97%, respectively.
The hash power on the network determines the time for block production- a process supposed to take 10 minutes. However, currently, the time taken to mine a single block on the network was around 12.9 minutes. This has hampered the daily block counts as it fell to just 58 on 27th June.
As global regulators make crucial decisions around crypto mining, businesses, trading, and transactions we may see more volatility in the market.