Ethereum’s hashrate has plummeted more than 25% since its peak level in mid-May. This is the direct result of China’s crackdown on cryptocurrency mining and the resultant exodus of mining operations.
According to Bitinfocharts, the Ethereum network hashrate hit an all-time high of 585.5 TH/s (terahashes per second) on May 20. In the weeks that followed it slumped to a three-month low of 434.3 TH/s.
The 26% decline over just six weeks has been the one of the sharpest falls in Ethereum’s history. Just 40 days after the hashrate hit its peak, it had plunged 17% in just 10 days. This is the worst drop in a 10-day span in Ethereum’s history according to data from Glassnode.
During the 2018 crypto winter, Ethereum hashrates fell 57% but they did so over several months.
Hashrate, which is a measure of network computing power, is loosely correlated with ETH price. As the asset gains value, mining becomes more profitable, attracting mining resources to the network and boosting the hashrate.
William Foxley, editorial director at Bitcoin mining firm Compass Mining, believes that GPU-based Ethereum mining is harder to suppress than large-scale ASIC (application-specific integrated circuits) mining for BTC. Speaking 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.
“Where things get interesting is for China-based Ethereum miners, who not only had to bear EIP 1559’s reduced fees, but now also a geographic transition out of larger industrial setups,”
The transition to ETH 2.0 and proof-of-stake will eventually phase out all Ethereum mining operations, but there could be a few rough months ahead for ETH miners.
In a related development, the SCMP has reported that small hydropower stations are now for sale on e-commerce sites in China.
As the demand for cheap power dries up, and crypto miners migrate to friendlier climes, the price of power generation installations has fallen.
Many of the plants are in the southwestern 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 ordered to shut down earlier this month.
