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Bitcoin mining difficulty likely to rise for the first time since the China crackdown

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  • Bitcoin mining difficulty will increase as North American mining facilities expand and Chinese miners migrate to overseas hosting sites.
  • A positive adjustment will increase hashrate and network security but will mean more energy consumption and fewer profits for miners.

Bitcoin’s mining difficulty is likely to increase for the first time since the Chinese crackdown on crypto mining facilities. According to industry pundits, the swift expansion of mining facilities in North America will mostly fuel the difficulty adjustment. Additionally, the Chinese miners’ exodus plays a role as the miners now operate through overseas hosting sites.

The mining difficulty value shows how hard it is to mine a block and get rewarded in Bitcoin. As the metric increases, miners need more computing power since Bitcoin is mined using the proof-of-work algorithm. This event is what is currently ongoing as there is an increase in online mining machines. For the miner, this means fewer profit margins. For the Bitcoin network, it means added security.

For quite a while now, China was a renowned mining region, producing more than half of global Bitcoin mining. However, since May 21, Chinese local authorities have been invariably shutting down mining facilities on the central government’s orders. The result was a decline in mining difficulty and hash rate.

Positive difficulty adjustment for Bitcoin mining

As of July 17, the latest bi-weekly difficulty level posted shows the fourth downward adjustment since the crackdown. Chinese miners will take over three months to return online, says Daniel Frumkin, a researcher at Slush Pool mining firm. Getting back on their feet means having to collaborate to build new infrastructure.

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“For the first time since China’s hash rate went lights out, we’re anticipating next week’s adjustment to be positive, a roughly 1.75 percent increase,” says a Saturday newsletter by Seattle-based miner Luxor.

According to Luxor CEO Nick Hansen, North American mining firms has already begun expanding operations before the Chinese crackdown. The companies include Riot and Marathon, having been motivated by Bitcoin’s historic bull run early this year. While Chinese miners faced a disastrous cessation, the rest of the miners got ‘manna from heaven.’

Marathon, for instance, entered a binding letter of intent with Compute North, a US-based hosting services provider. The Las Vegas-based company should now run about 73,000 bitcoin miners on part of the hosting firm’s data center.

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The future for BTC mining operations

Nevertheless, the positive adjustment could mean a drastic upsurge in hashrate as of 2022. Hansen said;

I think we have reached that minimum low difficulty point and now we are going to start to grow unless there are other big government shakeups or changing Bitcoin price,”

Frumkin concurred with this, saying “…adjustments will be positive for a long time”.

In the past, central Asian and North American mining companies enjoyed wide profit margins owing to low mining difficulty. Nonetheless, new companies all over the world are emerging and competing to set up new hosting sites. The window of opportunity is slowly slimming down.

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According to Hansen, the hash rate will return to the level before crackdown or exceed it in about 12 months. The timeline depends on how long mining centres take to start both new and existing mining rigs.

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Bitcoin Drops as China Declares Crypto-Businesses Illegal

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  • China declared that cryptocurrency-related businesses are illegal
  • Bitcoin, Ether, and stablecoin Tether do not qualify as legal tender in China
  • BTC drops in price as the announcement went out

Once again, China reiterated its antagonistic stance on Bitcoin and the cryptocurrency industry as a whole.

In an announcement, the People’s Bank of China (PBOC) mentioned that BTC, ETH, and USDT are not legal tenders in China. They added that these cannot be used in the currency market.

Additionally, the central bank deemed all crypto-related businesses as illegal. This includes overseas exchanges serving residents within China and derivative transactions.

Following the news, Bitcoin’s price fell by almost $2,000 as the news circulated. This has been a common pattern whenever China FUD comes out.

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Earlier, China also reiterated its stance on crypto trading and mining while testing the Digital Yuan. According to the PBOC, it will continue releasing regulatory pressure over the crypto trading industry.

Despite the negative news, many analysts remain bullish on Bitcoin and the cryptocurrency industry as a whole. According to analyst Lark Davis, this is not new and will happen again in the future.

In a tweet, Davis mentioned that “The year is 2025, #bitcoin has just corrected from 400k to 250k on China banning BTC fears.”

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Can Bitcoin Surpass $6,000,000? Ethereum and Polkadot Creator Details Possible Future of Crypto

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Early Bitcoin developer and co-founder of Ethereum and Polkadot, Gavin Andresen, is outlining a future where BTC rises to a staggering $6,000,000 per coin.

Gavin Andresen, who took over as Bitcoin’s lead maintainer from founder Satoshi Nakamoto in 2011, just published a new blog post detailing how BTC’s theoretical evolution could look.

Andresen describes a “possible” scenario where Bitcoin hits a price tag of $6,000,000 by 2061, transaction fees 326x higher than they are now, and the blockchain is used chiefly by whales.

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“Imagine: it is the year 2061. The BTC price is six million US dollars – equal to about a million 2021 dollars because of inflation.

Miners are being rewarded 0.006103515625 BTC per block, plus transaction fees of about 5 BTC for 4,000 or so transactions ($7,500 per transaction).

But most BTC transactions don’t happen on the BTC network. Most BTC is locked up in multi-signature outputs secured using multiparty computation and mirrored on another chain as ‘wrapped’ tokens.”

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In his scifi scenario, Andresen says those who do remain on Bitcoin’s network will be incentivized to keep it alive.

“The transactions that do occur on the main BTC network are high-value, mostly between super-whale-size holders…

These whales maintain the BTC network forever. They are the miners and the transaction creators; they don’t care how high transaction fees go, because they receive as many fees as they pay.”

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However, Andresen says that by 2100, even those users would likely leave the blockchain.

“In the year 2100 the whales notice that the mining reward is basically zero… Eventually, there are zero new BTC being produced on the BTC network, and zero BTC circulating on the BTC network. There is nothing left to secure, and the chain stops.”

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Top Analyst Maps Bitcoin and Cardano Price Trajectories, Warns Best Entry Point for ADA May Be Gone

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Top Analyst Maps Bitcoin and Cardano Price Trajectories, Warns Best Entry Point for ADA May Be Gone

Crypto trader Michaël van de Poppe is looking at what’s ahead for Bitcoin (BTC) and the smart contract platform Cardano (ADA).

The analyst tells his 420,000 Twitter followers that the best entry point for Cardano may be gone after the asset bounced off a key support level at $1.86.

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“If you want to get into Cardano, this was the region where you would want to get into it, and the higher low that might be created.

So based on the daily timeframe, the best entry might be gone, but you’re still getting a better entry than the ones who have been buying around $2.80.”

Van de Poppe is now looking to see if ADA can turn resistance at the $2.37 level into support.

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If the markets correct further, he is keeping an eye on the $2.15 level as a potential buy zone.

“When you’re looking at the four-hour time frame, I think you’re getting the exact same view as what you have right now on Bitcoin and [Ethereum], actually. So you’re going to look for an entry point which is around the fact of $2.15, so anything in this region might be a good entry point if we get a corrective move.”

Looking at the Bitcoin pair, van de Poppe thinks that ADA will most likely consolidate briefly after retesting support at its previous all-time high.

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“We can see that we’ve had a beautiful retest of the previous high here too, and therefore some consolidation is most likely going to take place before we’re going to have new impulse waves.

So both the USDT and BTC pair are looking for continuation, and I think that’s just great, and I think that’s just what we want to see with the markets right now.”

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