As Bitcoin prices continue to fall, China's tightening controls on domestic Mining could once again explain this sudden drop.
In the Xinjiang region, an estimated 400,000 Mining Rig were forced to shut down and have their power cut off. This sudden halt severed their revenue stream, forcing many operators to sell Bitcoin to cover costs or relocate.
Mining disruptions are increasing downward pressure on Bitcoin's price.
In a recent social media post, former Canaan chairman Jack Kong stated that China's computing power had decreased by approximately 100 exahashes per second (EH/s) in just 24 hours. He emphasized that this approximate 8% decrease occurred due to hundreds of thousands of Mining Rig being shut down.
This information emerged just before Bitcoin plummeted to $86,000 on Tuesday , breaking the $90,000 mark that the coin had held for the past week.
Some analysts XEM the timing of this event is not a coincidence, and point to a link between the shutdown of Mining Rig operations and the plunge in Bitcoin prices .
They argue that strict and unexpected control measures often force Miners to act immediately, adding short-term pressure to the market.
Miners ceasing operations put pressure on liquidation and led to sell-offs.
According to NoLimit's expert analysis, when Miners are forced to cease operations, a chain reaction usually follows.
This includes immediate loss of income, urgent need for liquidation to cover operating or relocation costs, and in some cases, the possibility of selling off holdings of Bitcoin .
These impacts could spread across the entire crypto market. When approximately 8% of Bitcoin's hashpower is suddenly disconnected, instability increases, putting further short-term pressure on Bitcoin's price.
"That's what creates real selling pressure, not the other way around," NoLimit explained.
The timing made the impact even stronger. The Mining industry in China had only recently regained its position as one of the major sources of global hashrate.
The return of the mining industry is facing sudden regulatory pressure.
Less than a month ago, China reclaimed its position as the world's third-largest Bitcoin mining hub. According to the Hashrate Index, the country accounted for approximately 14% of the global hashrate as of October.
Despite the official ban on Mining since 2021 , illegal mining continues to expand in many parts of the country .
Experts attribute the resurgence of Bitcoin mining in China to cheap electricity and surplus power in some areas.
In this context, this latest round of stricter controls has completely caught Miners off guard. Withthe new regulations suddenly tightening and hashrate continuing to decline, Miners ' revenue immediately became their biggest concern.
This pressure is further exacerbated by the fact that Bitcoin's price has also fallen by about 30% from its October peak, and transaction fees remain low , dragging Miners revenue down to recent Dip .
Because Mining is fundamental to the operation and security of the Bitcoin network, the recent sharp price correction can be XEM as consistent with the broader impact of this disruption, although the full extent of the effects will take more time to become apparent.
