Ethereum’s hashrate has plummeted more than 25% since it peaked in mid-May. This is the direct result of China’s crackdown on cryptocurrency mining and the resulting migration of mining operations.
According to Bitinfocharts, the hashrate of the Ethereum network hit an all-time high of 585.5 TH / s (terahashes per second) on May 20th. In the weeks that followed, it slumped to a three-month low of 434.3 TH / s.
The 26% drop in just six weeks was one of the sharpest drops in Ethereum history. Just 40 days after the hashrate peaked, it had dropped 17% in just 10 days. This is the worst drop in Ethereum history in 10 days, according to data from Glassnode.
During the 2018 crypto winter, the Ethereum hashrate fell 57%, but over several months.
Throwing out the Ethereum miners
The hashrate, which is a measure of the computing power of the network, is loosely correlated with the ETH price. As the asset increases in value, mining becomes more profitable, drawing mining resources into the network and increasing the hashrate.
William Foxley, chief editor of Bitcoin mining company Compass Mining, believes GPU-based Ethereum mining is harder to suppress than large-scale ASIC (application-specific integrated circuits) mining for BTC. Speaking to the Defiant, he said, “GPUs can be placed in small locations that the government are less likely to find.”
However, China-based Sparkpool, Ethereum’s second largest mining pool, has seen its hashrate drop by nearly 30% since the mandate was granted, he added.
“It will be interesting for the Ethereum miners based in China, who not only had to bear the reduced fees of EIP 1559, but now also a geographical transition from larger industrial plants.”
The transition to ETH 2.0 and the proof-of-stake will eventually phase out all Ethereum mining operations, but ETH miners could still have some tough months ahead of them.
Hydropower plants are getting cheap
In a related development, the SCMP reported that small hydropower plants are now being offered for sale on e-commerce sites in China.
As the demand for cheap electricity dries up and crypto miners migrate to friendlier climes, the prices of power plants have fallen.
Many of the plants are located in southwest Sichuan Province, an area in China with abundant water resources that can provide cheap electricity. As reported by CryptoPotato, 26 bitcoin mining operations in the province were closed earlier this month.
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