The Chinese authorities shut down of crypto mining farms in inner Mongolia is rumored to have caused the recent reduction in Bitcoin mining difficulty by almost 1.5% to nearly 22 T for the first time this year. Worse still, they are not approving any new ones. The reason for the shutdown is the failure of the province to attain its carbon emission goals. A draft of the bill is not just to shut down crypto mining operations; it also includes a shutdown of other industrial actions that consume high amounts of energy. The Chinese region of Mongolia is known to be among the top three provinces for mining cryptocurrency.
Causes of Variation In Mining Difficulty
The reduction in mining difficulty follows four successive increments and a 1% variation which seemed normal. Given the pressure to make high profits, there is higher competition among miners at a lower BTC price. However, there was less competition between miners when Bitcoin attained a new peak price at almost $60K, and miners were making gains with smaller amounts. Despite the rumors being unconfirmed, countries such as Kazakhstan, Iran, and the United States plan to create healthier conditions for crypto miners who would leave China to come into their countries. China as a whole account for about 66% of Bitcoin mining across the world, the U.S.A. Only contributes about 7.5% of global Bitcoin mining. Inner Mongolia’s cheap energy makes it accountable for 8% of the 65%.
Some Bitcoin enthusiasts confirm that Bitcoin mining consumes almost 130 terawatt-hour energy every year, which is more than Argentina, Ukraine, and a few other countries.
BTC Price Strengthening Its $50K Price Range
While BTC price spent the better part of the past week below $50,000 trading price, it’s now pushing to surge past the $50K range. You’ll recall that the foremost coin attained a peak price of almost $58.5K in the first week of last month before reacting to some whale movements that saw it experience a nearly 19.5% price reduction. From that time, the leading crypto has been attempting to establish reliable support at $46K and consolidate just below the $51K mark. With continuous exchange outflows and whale purchases, the foremost cryptocurrency metrics seem healthy, which indicates that the coin is yet to reach its peak. Traditional investors remain on point to accumulate as many Bitcoins as they can during the coin’s dips. One such investor is MicroStrategy. The software behemoth made another $10 million Bitcoin purchase (their fourth treasury cash purchase in recent times). Now, they have more than 90K Bitcoins which are estimated to worth almost $2.2 billion.
The mining difficulty is a reflection of the Bitcoin network’s computing power. The amount of effort users put into mining determines the level of mining difficulty. This computer power adjusted periodically to create a 10-minute block solution average time. So, this difficulty usually fluctuates at various times. Though “miners are selling” is the usual phrase when Bitcoin experiences any price dip, data and this news from inner Mongolia proves otherwise.