The Ethereum hashrate has plummeted more than 25% since its peak in mid-May. This is the direct result of China’s crackdown on cryptocurrency mining and the resulting exodus from mining operations.
According to Bitinfocharts, the hashrate of the Ethereum network reached an all-time high of 585.5 TH/s (terahashes per second) on May 20th. In the following weeks, it dropped to a three-month low of 434.3 TH/s.
The 26% decline in just six weeks was one of the sharpest drops in Ethereum’s history. Just 40 days after the hashrate peaked, it dropped 17% in just 10 days. This is the worst drop in a 10-day period in Ethereum’s history, according to data from Glassnode.
During the crypto winter of 2018, the Ethereum hashrate dropped 57% but declined over several months.
Expelling the Ethereum Miners
The hash rate, which is a measure of the computing power of the network, is loosely correlated with the price of ETH. As the asset gains value, mining becomes more profitable, drawing mining resources into the network and increasing the hashrate.
William Foxley, editorial director of mining company Bitcoin Compass Mining, believes that GPU-based Ethereum mining is more difficult to suppress than large-scale ASIC (application-specific integrated circuits) mining for BTC. In declarations to the Defiant , he stated:
GPUs can be placed in small locations less likely to be found by the government
However, China-based Sparkpool, Ethereum’s second-largest mining pool, has experienced a nearly 30% drop in hashrate since the mandate was issued, he added.
Things get interesting for China-based Ethereum miners, who have not only had to shoulder the reduced fees of EIP 1559 , but now also a geographic transition from larger industrial facilities
The transition to ETH 2.0 and proof of participation will eventually eliminate all Ethereum mining operations, but there could be some tough months ahead for ETH miners.
Hydropower Plants Are Getting Cheap
In a related development, SCMP reported that small hydropower plants are now for sale on e-commerce sites in China.
As the demand for cheap energy runs out and the crypto miners migrate to friendlier climates, the price of power generation facilities fell.
Many of the plants are in Sichuan province in southwest China, an area of China with abundant water resources that can provide cheap electricity. As reported by CryptoPotato, 26 Bitcoin mining operations in the province have closed earlier this month.
Source: Crypto Potato
