The difficulty of mining the digital currency has sharply declined over the last two months after a crackdown on Bitcoin miners in China knocked out large amounts of computing power
Bitcoin’s mining difficulty is expected to increase this weekend for the first time since May when a crackdown on crypto miners in China knocked out a large portion of computing power dedicated to running the digital currency’s blockchain network.
The difficulty of mining Bitcoin, which is reassessed every two weeks, has been on the decline since May 21 when China’s government called for local authorities to shut down Bitcoin mining operations in the country, forcing many operators to move their operations elsewhere.
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Since then, the difficulty of mining Bitcoin has fallen sharply due to the sudden drop in dedicated computing power and is currently at its lowest level since January 2020 after hitting an all-time high in late May.
China’s move also caused a sharp drop in the price of Bitcoin, in turn making it less appealing to mine and reducing the possibility of new entrants in the space.
However, the next assessment of the difficulty this weekend is expected to see the first positive adjustment in months, albeit only a slight rise of around 1.8%.
The increase has been attributed to relocating Chinese miners gradually starting to set up shop again in new jurisdictions, as well as the expansion of operations by large North American miners.
These developments are likely to push the difficulty of Bitcoin mining higher again, potentially returning to its pre-China crackdown level within the next year and possibly surpassing it to hit fresh highs.
In lunchtime trading in London on Wednesday, Bitcoin was up 7.6% in the last 24 hours at US$40,674, giving it a market cap of US$763bn.