Bitcoin mining was greatly affected between the months of May and June when China banned Bitcoin mining. However, it now seems that mining operations have fully recovered from this ordeal and miners have gone back to earn lucrative rewards.
The Chinese crackdown on mining caused a short-term disruption in the network, and the hashrate dropped to record lows.
Bitcoin Mining Operations Recover
Glassnode’s recent on-chain metrics depict that Bitcoin’s hashrate has recovered massively. In May, following China’s mining crackdown, around half of the Bitcoin network’s hashing power went offline, but this metric has almost recovered fully in the past few months.
The mining hash rate is a metric used to determine the total amount of computational resources in a proof-of-work network. The network comprises both the hash rate and mining difficulty, with the latter assessing competition among miners. The two metrics have shown great signs of recovery in recent weeks. In July, the mining difficulty had dropped by around 28%.
Since the end of July, the mining difficulty has increased by around 39%, and it is now almost back to the levels it was at before BTC miners started leaving China. The difficulty is expected to go even higher this week. The Glassnode on-chain metrics also stated that the simple moving averages on mining difficulty had reached the strongest reversal since the end of 2018.
A recent publication by Wu Blockchain further stated that Bitcoin mining difficulty had risen by 4.71% to reach a block height of 703,584 on October 5. The recent increase is the sixth one for this metric since the end of July 31.
Mining Profitability Increases
The Bitcoin mining profitability has increased over the past weeks. This comes even as the Bitcoin mining halving event in May last year cut down the mining profits by half from 12.5 BTC to 6.25 BTC.
The on-chain metrics from Glassnode also show that the mining profitability has increased by over 275% compared to before May 2020 to reach $40 million daily. This profitability had also increased by around 630% compared to June last year, when this profitability ranged between $6 million and $8 million.
Hence, despite the negative occurrences that Bitcoin mining has faced in terms of a changing mining market, extreme volatility and the halving in May 2020, profitability from mining activities has continued to soar. This has equipped the market with the incentives needed for it to adapt and recover from past turmoil.
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