Bitcoin has experienced phenomenal exponential growth since its release. The store value of bitcoin recently touched a milestone of $65000. No virtual assets have halted such milestones in terms of store value. Bitcoin’s market price and jaw-dropping returns have fascinated everyone, from millennials to savvy investors and traders; bitcoin has elated everyone.
However, bitcoin’s essence is not just as an investment asset or a trading instrument. Bitcoin’s inventor underlined bitcoin as a payment ecosystem that is decentralized and equipped with a peer-to-peer network. Since bitcoin is decentralized, the value of bitcoin is exceedingly fragile.
Some factors influence the store value of bitcoin, such as supply and demand, lousy press, crypto regulations, and many more. Recently, there was a cryptocurrency market crash. Still, bitcoin trading is very profitable. There are websites like Crypto Trader App, which can allow you to get profitable results in your bitcoin venture. Unfortunately, the cryptocurrency market crash decreased. The market value of bitcoin and other cryptocurrencies to an exceeding extent.
The cryptocurrency market crash correspondingly affected the bitcoin mining industry to an exceeding extent. Below mentioned portion demonstrates the effect of the cryptocurrency market crash on the bitcoin mining industry. So, without wasting any further ado, let’s have a glance.
Cryptocurrency market crash
Since cryptocurrencies mainly, bitcoin, are entirely decentralized, several factors affect the market value of these currencies. First, the cryptocurrency market crashed majorly due to crypto regulation and bad press. There are two specific reasons behind the cryptocurrency market, the first is Elon musk’s tweet, and the second is the China summer crypto crackdown.
On the 13th of May, Elon Musk announced that Tesla is not accepting bitcoin payments anymore. He justified his statement by addressing the electricity consumption of bitcoin mining and its effect on the environment. However, Musk’s tweet demonstrated the suspension of bitcoin as a payment method decreased the market value of bitcoin.
China cryptocurrency crackdown was about to ban bitcoin as a payment method. And financial institutions offering cryptocurrency services to Chinese investors.
The crackdown did not utterly ban bitcoin trading as well as an investment but did ban bitcoin mining. After the announcement of the cryptocurrency crackdown in China, the store value of bitcoin and other cryptocurrencies declined to an exceeding extent.
How Did Market Crash Affected Bitcoin Mining Industry?
The market crash affected the store value and market cap of many cryptocurrencies in a negative manner. However, the effect of the market crash on bitcoin mining is exceeding positive, but why? Let’s find out.
The China cryptocurrency crackdown is one of the primary reasons for the cryptocurrency crash. China’s crackdown did not only ban bitcoin as a payment method but also bitcoin mining. In a nutshell, China has now banned bitcoin mining.
You are familiar with the fact that China was the capital of bitcoin mining. China contributed 65% of the hash rate in the bitcoin mining global chain. After the bitcoin mining ban in China, there is much lesser competition in the bitcoin mining industry. The difficulty of bitcoin mining is directly proportional to the number of miners competing to mine bitcoin.
The decline in Hash Rate
Bitcoin algorithm measures the difficulty of bitcoin mining in terms of hash rate. After the bitcoin mining ban in China, there was a massive downfall in the hash rate of the bitcoin mining global chain.
The fact might stun the difficulty of bitcoin mining decreased by almost 50% after the bitcoin mining ban in China. Before the bitcoin mining ban in China, the global bitcoin mining chain touched its highest hash rate, which is 21 trillion hashes.
Profitability of Bitcoin Mining
After the bitcoin mining ban in China, the profitability of bitcoin mining has changed to an exceeding extent because Bitcoin mining pools can get more block rewards without putting in the extra effort.
Several mining pools have stated that they earn one bitcoin extra on average after the bitcoin mining ban in China. To sum up, bitcoin mining is now more profitable after the bitcoin mining ban in China. Even solo miners are now able to mine bitcoin units very easily.
The portion mentioned above demonstrates how the cryptocurrency crash affected the bitcoin mining industry.