By Alicia Maher
The Bitcoin mining industry has been on a rollercoaster ride lately, leading to a massive reduction in mining difficulty and hash rate. Although recent data reveal that both are gradually recovering, experts have opined that they might never get to their former levels as China, which contributed a bulk of the total amount of both for Bitcoin no longer supports crypto mining.
Global hash rate had plummeted by 55% from its ATH in May, being the fallout of China’s regulatory pressure. The regulatory momentum in China has been building up since May and then hit the roof last month, causing a massive exodus of mining companies from the Asian country. During that period, miners migrated to mining-friendly regions. That gap had been the cause of the hash rate and mining difficulty decline.
Hash Rate Recovers Slowly from 55% Drop
As an indication that miners have resumed their activities, data released by on-chain analytics firm Glassnode shows that the mining industry is making a comeback. As of June, Bitcoin mining difficulty experienced the biggest drop ever- reduced by 28%. While the hash rate plunged from a high of 171 EH/s to 55 EH/s, it is now back to 92 EH/s as of Monday. Glassnode’s data reveal that instead of a 55% drop in hash rate, the gap has closed by 16%.
Interestingly, accumulation of Bitcoin has also resumed, suggesting that miners’ confidence in the asset is back and on the rise. In June, accumulation by miners depleted as miners traded off some of their rewards. However, as of this week, exchanges witnessed a low inflow of the flagship cryptocurrency into custodial wallets. Accordingly, Glassnode highlighted two factors as being responsible for the accumulation- one, Chinese miners have been able to migrate their mining hardware; two, they have resumed operations.
Crypto Exchanges Notice BTC Withdrawals
Exchanges have observed massive BTC transfers within the past few weeks. It is common practice for investors to withdraw their assets from exchanges into non-custodial wallets for storage. Then during an uptrend, they move it back into exchanges to trade off their holdings. US-based exchange, Coinbase reported a transfer of 7,062 from two custodial wallets on its platform at the start of July.
Glassnode also reported that withdrawals on leading exchanges have increased in recent data. According to the analytics firm, the total Bitcoin balance on exchanges have reduced by 40,000 within the July and last month. This accounts for 28% of a cumulative inflow of 140,000 BTC recorded three months ago. Glassnode revealed that the total number of the top crypto asset held on exchanges on its radar amounts to 2.56 million.
Meanwhile, the expectations are high for where Bitcoin price would bottom in light of Grayscale’s Bitcoin Trust offloading which is scheduled for Tuesday. Experts at JPMorgan predicted a 25k bottom, though it recorded a low of 28k last month after China cut off power supply in its Sichuan province due to miners.
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