Bitcoin mining went industrial a few years ago. Because it continually gets harder to mine cryptocurrency, most people can no longer do so fast enough to make a profit, leaving the creation of new bitcoins to massive companies with serious hardware. Bitmain is one of those companies, yet it disclosed on May 7 that it decreased its Bitcoin mining production by a whopping 88% between April and May.
The company was tight-lipped about why it recently decreased production by such a staggering amount. Coindesk requested comment and was only told, "It is [in the] natural course of the mining business where the hash rate owned by one body at one instant may be owned by someone else at another instant." (Bitmain is based in China, so we suspect that message was translated somewhere along the way.)
We've reached out to Bitmain to see if it will offer more information about the decreased production. In the meantime, the company's disclosure updatedon May 7 revealed that the combined hashrate of all its hardware dedicated to the SHA-256 cryptographic hash used by Bitcoin for the last 30 days was 237.29 quadrillion hashes per second (PH/s). The previous disclosure pegged the company's production at 2,072 PH/s.
This decrease isn't only surprising because of its size. It also comes after Bitcoin's price has risen nearly 60% so far this year, and Coindesk reported in March that numerous cryptocurrency mining companies were actually planning to increase production this summer, largely because the start of the rainy season in China should lead to cheaper hydroelectric power. Lower costs + higher prices = greater profits.
It's possible that Bitmain's production didn't fall so much as it was reallocated, with the company renting out its hardware to other companies. Maybe it's not counting that hardware as being "Bitmain-owned" for the purpose of that disclosure. Maybe it thinks Bitcoin's price will fall in the near future. Or perhaps it was instructed to cool its jets--or rather its mining equipment--by the Chinese government.
That last possibility wouldn't come as a surprise. The Chinese National Development and Reform Commission announced on April 8 that it wanted the public's opinion on a modified list of industries to curtail or nix entirely. Cryptocurrency mining was one of the industries put on the chopping block. Tuesday was the last day the Chinese public could offer its opinion on the new list; maybe that's not a coincidence.