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China’s ongoing Bitcoin mining crackdown has sent the price of graphics cards plummeting

The Bitcoin hashrate plunged over the weekend following a clampdown on cryptocurrency mining by the southwestern Chinese province of Sichuan. This crackdown caused graphics card prices to plummet in China.

China’s ongoing Bitcoin mining crackdown has sent the price of graphics cards plummeting

According to bitinfocharts.com, the Bitcoin hashrate plunged to 91.2189 exa hashes per second on Sunday from 112.625 EH/s last Friday. BTC.com data showed that some major China-based mining pools were experiencing hashrate drops. Poolin, for instance, saw a 13.46% decline in its hashrate in the 24 hours up to press time, while BTC.top recorded a 29.35% drop, according to BTC.com.

chinas-ongoing-bitcoin-mining-crackdown-has-sent-the-price-of-graphics-cards-plummeting

Source: bitinfocharts

Information from CryptoQuant also states that:

“To put the recent hash rate drop into perspective, we can look at the Historical Volatility index (standard deviation from 14-day mean value); HV (14). Historically speaking, we have not seen high volatility in the 14-day hash rate yet (overall integrity is intact). Still, a 25% drop in hash rate compared to its 14-day-moving average value (ROC (14)) is a bearish sign for the market (short-term negative effect on market sentiment).”

chinas-ongoing-bitcoin-mining-crackdown-has-sent-the-price-of-graphics-cards-plummeting

Sichuan is the latest province to be hit by a crypto mining clampdown. Yunnan’s energy authority this month announced a campaign to end unauthorized electricity use in Bitcoin mining. The local government of Changji Prefecture, in Xinjiang, and the governments of Qinghai and Inner Mongolia ordered miners to cease operations earlier this month.

And it is because of these crackdowns that key components of mining operations – like graphics cards – are much more affordable in the country but leave miners with fewer locations to open shops.

Graphics cards, typically associated with computers used for video gaming, are an important hardware component for cryptocurrency mining because of the extra processing power they provide for hashing, the complex computations used to create a more digital currency and verify transactions on the blockchain. The more computational power a miner controls, the better the chances of beating others to adding new blocks to the blockchain and reaping the rewards.

chinas-ongoing-bitcoin-mining-crackdown-has-sent-the-price-of-graphics-cards-plummetingPhotographic image

According to SCMP, graphics cards from companies including Nvidia and Asus saw prices fall by as much as two-thirds on e-commerce platforms amid China’s sweeping Bitcoin crackdown:

“The Nvidia Quadro P1000 model, an entry-level graphics card, was going for 2,429 yuan (US$376) on a JD.com franchise store on Monday morning, down from a peak of nearly 3,000 yuan in early May, before the State Council’s financial watchdog vowed to crack down on bitcoin mining.”

The article stated:

“The Asus RTX3060, a more advanced card, was down to 4,699 yuan on Monday from its peak of 13,499 yuan in May on Tmall, operated by JD.com rival Alibaba Group Holding, the owner of the South China Morning Post. The price changes were tracked by e-commerce information provider Manmanbuy.”

The price plunge comes after southwest Sichuan province pulled the plug on mining farms on Saturday night. However, not a single major Chinese Bitcoin mining hub has escaped Beijing’s harsh crackdown amid price volatility recently caused the value of the cryptocurrency to drop more than 40% in May. Inner Mongolia, Xinjiang, and Sichuan were once attractive locations for miners because of cheap electricity, but now they are hostile environments.

An order issued on Friday is the latest move by Chinese authorities against the country’s beleaguered crypto mining sector, which has been the target of regulatory action for several months.

Now many Chinese miners have either suspended operations entirely or are making plans to move overseas, reducing network activity and impacting bitcoin mining productivity worldwide.

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