The crypto circle exploded today—a major shock as the Bitcoin network suddenly faced a 'hash rate earthquake'. A number of mining farms in Xinjiang were inspected overnight, with at least 400,000 mining machines directly shut down! This operation came swiftly and fiercely, causing the overall network hash rate to plummet over 17%, crashing from a high point to 988 EH/s. As someone who has been immersed in the crypto space for eight years, I can say this is definitely not just an ordinary market fluctuation, but a precise 'scalpel' strike against the underground mining industry chain!
There may be new fans asking, wasn't mining explicitly banned in 2021? How come there is still such a big commotion? This brings us to an open secret: regions like Xinjiang, with their unique advantage of cheap electricity resources, have always been the 'underground heart' of global Bitcoin mining. Even though the ban is prominently displayed, many mining farms are still secretly engaging in 'underground business', contributing as much as 14% of the global hash rate at their peak, making it a solid third-largest province by hash power in the world.
As for why this sudden action was taken? In my judgment, last month's foreign media report (China's Bitcoin mining power is quietly reviving) is most likely the direct trigger. It is important to know that cryptocurrency mining not only consumes massive amounts of energy, but also carries significant financial risks, and regulators have maintained a high-pressure stance on this. The exposure by foreign media is equivalent to putting this 'underground time bomb' on the table; if you don't investigate, who will?
Next, let me share some valuable insights with you. The chain reaction of this power storm is far more complex than you might imagine:
First is the 'ice and fire' situation of network security and miner profits. The overall network power has plummeted by 17%, and the most direct impact is the significant decrease in network hash rate, which means that the security protection capability of the Bitcoin network has been weakened, theoretically increasing the risk of attacks. Interestingly, due to the lag in mining difficulty adjustments, the remaining miners in the short term can actually receive more profits, which can be described as a real-life version of 'survival of the fittest'. However, this bonus is certainly temporary; once the difficulty adjustments are in place, profits will return to normal levels.
Secondly, the 'great migration' of miners is replaying once again. Doesn't this scene seem somewhat familiar? That's right, it's just like the major crackdown in 2021. Now, domestic mining site owners face two choices: either hide more secretly and continue to 'fight guerrilla warfare' underground, or completely pack their bags and head overseas to compliant mining pools in the US, Kazakhstan, and other places. Personally, I am more optimistic about the latter; after all, regulation is becoming increasingly strict, and the risks of underground mining will only rise, while compliance overseas is the long-term strategy. This also means that the global mining landscape may undergo a major reshuffle, with mining sites in the US and Kazakhstan likely to become the biggest beneficiaries.
The most critical point, and one I want to emphasize: this incident has once again exposed Bitcoin's 'fatal weakness'—the so-called 'decentralization' is actually vulnerable. For a long time, Bitcoin has prided itself on being a decentralized financial system, but in reality, its mining power is highly dependent on energy and policies from specific regions. Once Xinjiang takes action, the entire network 'shakes'; where is the decentralization in that? It's clearly handing over the lifeline to a few regions. Any slight disturbance can trigger violent fluctuations in the entire network's hash power; does such a network truly deserve the label of 'safe and reliable'?
Speaking of this, some old friends might ask: what about the situation with Ethereum? Are there any hot projects related to Musk worth paying attention to? In fact, this power storm mainly affects Bitcoin mining, but the crypto market has always been 'prosperity for one is prosperity for all, adversity for one is adversity for all'; subsequent market fluctuations may be triggered, so everyone should remain vigilant. As for those so-called 'wealth password communities', I advise everyone to be cautious; real opportunities are never gained through others shouting slogans, but through one's own judgment of the market.
Finally, I want to share a few heartfelt words: as a seasoned analyst, I have seen too many ups and downs in the crypto market, but this power storm has reinforced my belief in a principle: any industry that operates outside regulation and straddles the gray area will ultimately face the fate of being rectified. Is this 'growing pain' of the Bitcoin network an inevitable experience on the path to decentralization, or another exposure of its fragility? Will the global mining landscape be completely rewritten because of this?
Welcome everyone to leave your views in the comments section, and let's discuss together. Follow me@Square-Creator-e677125ff2da0 , so you won't get lost! I'll keep you updated on the latest developments in the crypto market, break down the underlying logic, and help you avoid those pitfalls.
