The Bitcoin mining sector has seen some major ups and downs in 2021. Cast out from China, a former hub for this activity until very recently, the network’s hashrate dropped it’s yearly low and has been recovering ever since.

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A report by Hashrate Index written by Colin Harper attempted to study the effect on the network and its markets of China banning Bitcoin miners from their territory. The report called this event “the most historic shift” on these sectors to data.

As a consequence, BTC mining operations had to reallocate to other parts of the world with the United States becoming one of the largest beneficiaries, Hashrate Index said. This event has been referred to as “The Great Migration” and it has led to an “unprecedented restructuring of hashrate across the globe”, the firm added.

As seen below, the Bitcoin hashrate has made an impressive comeback into pre-ban highs. In June 2021, this metric stood at around 69 EH/s after peaking at 190 EH/s, Harper said, and by the end of September, it experienced a 103% recovery into the 140 EH/s.

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Source: Hashrate Index via Colin Harper

The report claims that Marathon, Bitfarms, Argo, Riot, Hive, and other public Bitcoin mining companies in the U.S. have been mining more BTC since the beginning of October than “ever before”. Marathon and Riot have especially benefit surpassing the 1,000 BTC mined.

In the aftermath of the ban, the price of Bitcoin dropped by 50%, but it has made its way back along with the hashrate.

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Those miners able to keep their operations live while expanding them have benefited from a period of profitability with the hashprice, a metric used to determine how much revenue a miner can get from its hashrate, denominated in U.S. dollars doubling since June, Harper said.

Looking at BTC denominated hashprice, we get a clearer picture for just how profitable this time has been for miners. Notice July 3’s 27% downward difficulty adjustment, which was followed by a 70% increase in profitability.

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Source: Hashrate Index via Colin Harper

A Period Of Sustain Profits, Bitcoin Miners Get Richer

The decline in the price of Bitcoin has impacted the miners, but due to the reduction in competition, some entities are capable of mining more BTC. Therefore, their hashprice and profitability increase. The report added:

If Bitcoin makes another run this year at an all-time high, we’ll see USD-denominated hashprice break  its yearly high of $0.41, especially if the fee market picks up (more on this later).

Conversely, the network fees revenues have plummeted. Harper believes this is the result of BTC’s price crashing. During these times, fewer people have incentives to use the network. In addition, the Segwit and second layer payment solution Lightning Network levels of “adoption are at all-time highs”.

In the coming months, Hashrate Index expects the Bitcoin hashrate to return to its previous highs near 190 EH/s. In addition, they expect more profits for the mining sector with the hashprice closing 2021 above its yearly high of $0.50/TH.

In addition, the report claims a return in transaction fees revenues. This will “at least double” in Q4, 2021 suggesting more people will jump into the network increasing the demand for the underlying asset and potentially more appreciation for BTC’s price.

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At the time of writing, BTC’s price trades at $56,293 with sideways movement in the daily chart.

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BTC moving sideways after a brief dip in the daily chart. Source: BTCUSD Tradingview

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