The Chinese government’s ban on Bitcoin miners is turning out to be a blessing in disguise. After two months of the problem, the surviving mining companies are now reaping massive profits from their activities.
The truth is that the catastrophe forced many miners to leave their jobs. As a result, competition has decreased, and those who remain benefit from the situation.
According to the study, mining revenue has increased by 10%, resulting in a $4.3 million profit. The firms also saw a 22% boost in transaction costs, or $118,000 per day.
According to YCharts statistics, this pattern has been continuous since the crackdown. For example, on June 27, revenue was $13 million. However, by August 17, the figure had risen to $48 million, a disparity of $35 million.
Many Chinese provinces kicked Bitcoin miners out of their region a few months ago. Following that, the government ordered banks to stop working with miners as well. Following the incident, up to 90% of bitcoin miners fled in search of more hospitable locations.
This issue had a significant impact on the blockchain. The hash rate plummeted by half, demonstrating Bitcoin’s reliance on Chinese miners.
During that time, however, more BTC began to flow to miners who were not based in China. As a result, competition decreased and profitability improved for the miners who survived.
However, when Bitcoin fell from $63,595 on April 12 to $63,595 in May, June, and July, many miners refused to pay out their BTC. Instead, they continued to stockpile it, expecting for the price to rise. Based on the net position of mining activities, miners are now selling their BTC. It also implies that they anticipate a price increase. In just one month, Bitcoin has risen to $17,000 in value. This could imply that the miners’ refusal to sell diminished downward price pressure.
Even if the price is rising, obtaining Bitcoin incentives is becoming more difficult. According to the Glassnode report, this is the case. In two months, the hash rate has increased to 25%, and as a result, the difficulty of Bitcoin has also increased.