China has banned Bitcoin mining recently as most of the crypto people know. A major share of the bitcoin miners were located in China and they need to move their equipment from there. Since chinese miner are shutting down this is causing the hash rate of the bitcoin network to go down.
Here we will be looking at the long term data for the hash rate of Bitcoin and then take a closer look at the last month and year, to see the effect of the Chinese ban. For context we will have a look at the activity on the network as well.
Just a note for those that are not familiar the hash rate represents how much computation are being made, or in simple terms how much mining power is allocated to the network. The higher the hash rate the more secure the network is.
The data presented here is mostly gathered from the blockchains charts.
Hash Rate
First the chart for the long term data.
The period above is after 2016, since before that the hash rate is barely visible on the chart.
The first major increase in the hash rate happened in 2017. After the bull marketed ended there was a drop in the hash rate but then it started to grow and it reached new ATH in 2019. A lot earlier then the price increase in 2020.
As we can see the hash rate has been increasing steadily in 2019 despite the changing prices. In 2020 the growth continued and the same goes for 2021, up until recently when we can see a sharp drop in the last month.
If zoom in 2021 we have this.
As we can see from the chart the hash rate has been growing up until May, when it had a drop, first most likely because of the prices going down, but then a more significant drop in June.
Zooming in further just for June 2021 the chart looks like this.
We can see that at the begging of June the hash rate was around 160M [TH/s] (million tera 😊) and in the last days it has dropped to under a 100. This is more 30% drop in just a month. Quite impressive.
Before the start of the decline, at the beginning of May the network was going for a 200 MT, and now is at around 100. Will be interesting to see how much time would it take for the miners to plug in again and push the hash rate.
Active Wallets
For context let’s take a look at the active wallets in 2021. Here is the chart.
At the begging of the year Bitcoin was pushing towards a one million active wallets per day, going more than 900k on a few occasions.
Then in May the numbers went down, as the price dropped as well, and it has been in a slow decline since then.
The number of active wallets didn’t drop as much in June as the hash rate. We can see that the impact on the miners is bigger then the active wallets.
Transactions
Another parameter for the activity are the numbers of transactions. Here the chart.
Here we can see a slow decline in the numbers of transaction over the whole 2021, with maybe just a slightly bigger drop in May. This is an interesting data as it shows that Bitcoin transactions are not following the price that much. If they were corelated with the price we should see a chart with the transaction increasing up to the beginning of May and then a sharp drop. But this is not the case.
Overall, we can notice a clear impact of the hash rate from the Chinese ban. The hash rate of Bitcoin has dropped 30% in June, and it is almost at half from the previous ATH. The hash rate as a parameter has been quite resilient to the price fluctuations in the last few years and has kept growing up until now. I personally would expect a fast recovery in the next few months as soon as the equipment is moved around the globe and new mining farms are setup elsewhere. We will need to wait a bit to see would it really turns out this way.
The other parameters, as the active wallets and transactions have also dropped but not on the scale as the hash rate.
Its interesting times for the Bitcoin network and yet another test that it is going through. Probably somewhere half of the miners are forced to quit operations, that for sure is a big thing, but the network still continues to operate normally. We will see how the hash rate continues in the near future and will it be back to the previous levels. That will be a positive sign probably and the market will react in a positive way most likely if that happens.
