Amid China’s crackdown on Bitcoin mining, the cryptocurrency’s algorithm has adjusted accordingly, making it easier for the crypto miners to keep their productivity intact.
The adjustment took effect early on Saturday, ensuring that more cash went to online bitcoin miners.
CNBC quoted a Bitcoin mining engineer as saying that now they could earn more of the cryptocurrency every day.
“This will be a revenue party for miners,” said Bitcoin mining engineer Brandon Arvanaghi.
With fewer competitors post crackdown, miners are going to see more revenue and a significant increase in profits, experts say.
How is Bitcoin mined?
For mining a Bitcoin, a user has to complete a block by solving a puzzle, which is done by running a programme on a computer before others. Completing a block also updates the digital ledger, which keeps track of all Bitcoin transactions.
Effect of China crackdown
China had long been a hub of Bitcoin mining, with 65 to 75 percent of the world’s mining happening there, as per past estimates.
In May, China vowed a clampdown on Bitcoin mining and trading as part of its measures to control financial risks.
Following this, the authorities in the southwest province of Sichuan on June 18 ordered all Bitcoin mining projects to stop.
“Crackdown on Chinese miners might mean that they are offloading coin into a thin market and taking us lower,” said Ben Sebley of London-based crypto firm BCB Group.
CNBC quoted a Chinese bitcoin miner as saying that for the first time in the network’s history, mining was completely shut in a targeted geographic region, affecting more than 50 percent of the network.
This led to a fall in over 50 percent of the hashrate – the collective computing power of miners worldwide – since its market peak in May.
Now fewer people are mining, which means that fewer blocks are solved each day. It takes about 10 minutes to complete a block, but according to the Chinese miner Darin Feinstein, the Bitcoin network has slowed down to 14- to 19-minute block times.
This is why Bitcoin now re-calibrates every 2,016 blocks, or about every two weeks, making it tough for miners.
But on Saturday, the Bitcoin code automatically made it about 28 percent less difficult to mine – a historic drop – thereby restoring block times back to the optimal 10-minute window.
According to a chief executive officer of a digital currency company, Bitcoin algorithm is programmed to handle an increase or decrease in mining machines.
All Bitcoin miners share the same economics and network.
Kevin Zhang, former Chief Mining Officer at Greenridge Generation, the first major US power plant to begin mining behind-the-meter at a large scale, says assuming fixed power costs, those using the latest-generation Bitmain miner were earning $29 revenue per day, versus $22 per day before. Zhang also noted that the mining revenue has dropped only 17 percent from the bitcoin price peak in April, while the crypto’s price has dropped by half.