Largest Decrease in History! Millions of mining machines in China shut down, Bitcoin's next mining difficulty adjustment could drop by 22%

According to data estimated by BTC.com, in the next mining difficulty adjustment, Bitcoin's mining difficulty is expected to decrease by approximately 22%. This marks not only the largest difficulty adjustment in Bitcoin's history, but also the first time the mining difficulty has decreased for three consecutive times since December 2018.

The Largest Difficulty Adjustment in History

The Bitcoin system adjusts mining difficulty every 2016 blocks, approximately every 2 weeks, to ensure that the block production speed remains around 10 minutes despite fluctuations in network hash rate. Due to China's tightening policies on Bitcoin mining, the three major mining hubs in Inner Mongolia, Xinjiang, and Sichuan have announced bans on cryptocurrency mining activities. This has caused a significant drop in the overall Bitcoin network hash rate as a large number of Chinese miners have shut down.

According to data calculated by BTC.com, in the next mining difficulty adjustment at block height 689,472 (approximately in five days), Bitcoin's mining difficulty will decrease from the current 19.93 T to 15.36 T, a reduction of about 21%. This marks the largest difficulty adjustment in Bitcoin's history and the first time since December 2018 that Bitcoin's network has seen three consecutive difficulty decreases, with reductions of 15.97% and 5.3% occurring on May 30 and June 14, respectively.

However, this seems to be good news for Bitcoin miners outside of China, as they will be able to mine more Bitcoin without increasing their costs.

Millions of Miners Shut Down

Since the governments of Xinjiang and Sichuan announced bans on cryptocurrency mining, millions of Bitcoin mining machines in these regions have been forced to shut down. Some mining facilities with more resources have chosen to relocate their operations to Kazakhstan or the United States, while those unable to move have been forced to sell their mining machines to recoup costs. This has led to a surge in the supply of second-hand Bitcoin mining machines in the market, prompting mining machine manufacturer Bitmain to temporarily halt the sale of new machines to help miners in difficulty offload their second-hand machines.

Igor Runets, the founder and CEO of BitRiver, a Russian Bitcoin mining hosting service provider, stated in an interview that shortly after the Sichuan government issued the ban, BitRiver signed contracts with Chinese mining clients for 150 megawatts of hosting capacity, which will be fully utilized within four months. Runets believes that there is currently a shortage of global mining hosting services and it will be difficult to meet the new demands of Chinese miners in the short term.

"Given the shortage of hosting space for Bitcoin mining machines and the time required to build new mining facilities or deploy new machines, I believe that the overall Bitcoin network hash rate will not recover in the short term."

Furthermore, Runets added that many miners in China who have shut down are keeping their machines, waiting for the Chinese government to reverse its mining policies after the end of the Chinese Communist Party's anniversary celebration.