Bitcoin's difficulty rate drops by 28% as China's cryptocurrency crackdown continues

As China's crackdown on mining farms continued, there has been a volatile trend since previous adjustments.

Bitcoin's mining difficulty rate has reportedly dropped by nearly 28 percent after a significant drop in hash rate after China's crackdown on cryptocurrency mining. This makes it the largest decrease in mining difficulty since it went live in 2009, a cryptocurrency news website The Block reported.

The State Council, China's cabinet, last month vowed to clamp down on mining and trading as part of a series of measures to control financial risks. Data on mining is scarce. Yet the production of bitcoin in China accounted last year for about 65 percent of global production and Sichuan is China’s second-biggest bitcoin mining province, according to data from the University of Cambridge, with Sichuan its second-biggest producer.

Companies that mine bitcoin - an energy-intensive process - typically hold large inventories of the cryptocurrency, with any moves to sell large amounts depressing prices.

The authorities urged local governments in Sichuan to start combing crypto mining projects and shut them down. It banned new projects. Other regional mining centers including Xinjiang, Inner Mongolia and Yunnan have ordered crackdowns on bitcoin mining.

The mining difficulty level on the Bitcoin network is updated nearly every two weeks. As China's crackdown on mining farms continued, there has been a volatile trend since previous adjustments. Since the previous adjustment on June 13, Bitcoin’s seven-day moving average hash rate has fallen from 136.47 EH/s to 85 EH/s — down 35 percent, the report said.

This was followed by slower block production as the remaining hashing power couldn't keep up with the high difficulty level.

[Input from Reuters]