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Bitcoin mining difficulty dropped to January 2020 levels

The recent ban on cryptocurrency mining in China continues to reduce the difficulty of mining to new lows. According Blockchain.com, mining complexity has reached a two-year low and is now at 13,673 trillion.

Network Difficulty (BTC)

While the main reason for the drop continues to be China's mining ban, which led to the shutdown of more than 90 percent of the country's Bitcoin mining capacity, we can now add to that the recent significant drop in the Bitcoin price, which may have affected some miners who decided to close their mining companies.

However, low mining sophistication is not always a bad sign. As both financial and cryptocurrency markets are currently struggling due to a potential new COVID-related crisis, additional selling pressure from a large number of miners could affect the price even more.

This is also good news for those new to mining. According to the Miners' Profitability Chart, Bitcoin mining profitability bottomed out on June 27, now steadily rising, remaining around $33 million. Mining is still more profitable today than it was in January 2020, when revenue was around $13 million. Miners Revenue (BTC)

At this point, a significant drop in the difficulty of mining led to an increase in mining volumes. Since the price of Bitcoin is now nearly four times what it was in January 2020, the decline in mining volumes is likely just a consequence of the Chinese government's actions.

According to additional current data, such as Stablecoin supply ratio, we see that since May, capital has been flowing from Stablecoin back into BTC. This could be a good general sign, as investors prefer to gradually move funds from more stable assets back into volatile bitcoin.

Despite all the data on the chain, Bitcoin's current market performance is far from bullish. At the time of publication, bitcoin is trading at $44,881 and this is already a week with negative dynamics, after the recent surge to $52,790.

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