China miners migrate before government crackdown arrives

Key facts:
  • Bitcoin hash rate is migrating from China to the US. UU. and Kazakhstan.

  • Research shows that China’s share in Bitcoin mining dropped by 29%.

The Cambridge Centre for Alternative Finance (CCAF) research team presented new data showing the geographical changes of Bitcoin mining. The analysis shows that China’s share declined dramatically long before the government crackdown in June 2021.

New CCAF data at Cambridge Judge Business School reveals China’s involvement in Bitcoin mining decreased from 75.5% in September 2019 to only 46% in April 2021, even before the restrictions were imposed. Instead over the same period, the US share in the Bitcoin total hash rate it increased from 4.1% to 16.8%.

In the report also Kazakhstan’s increased mining share highlights which now ranks third in the ranking going from 1.4% to 8.2% in the same time span. Russia and Iran are right in fourth and fifth place.

In 2019 the Cambridge Bitcoin Electricity Consumption Index (CBECI) platform was launched, in a context of growing concern about the sustainability and environmental impact of Bitcoin mining. Since then, a global debate has taken on special importance in recent months, especially following statements by Tesla co-founder and CEO Elon Musk.

Bitcoin mining map showing global hash rate percentage from August 2019 to March 2021 showing China in first place. Source: University of Cambridge / cbeci.org

Under the argument of environmental impact, from May China’s Government has limited Bitcoin miningand in some provinces he has banned it. The energy provider State Grid has been one of the main drivers claiming electricity shortages in some provinces of the country. They have even pointed out risks in Bitcoin to excuse the creation of the digital yuan.

Miners are moving out of China

The analysis also points to the annual migration of miners and their equipment, from the northern province of Xinjiang south of Sichuan. This was done with the aim of take advantage of the abundant electricity at low cost, generated by its hydroelectric plant. In 2020, Sichuan’s share of China’s total Bitcoin mining power increased from 14.9% to 61.1% in the rainy season. However, in June 2021 the total suspension of Bitcoin mining was ordered.

Seasonal migration it has affected the energy profile of Bitcoin mining in China, which so far has been by far the largest mining market. With recent bans from the Chinese government’s Development and Financial Stability Committee, China’s hash rate has disappeared overnight, suggesting a movement of miners and their equipment to other locations.

Increased participation in countries such as the United States and Kazakhstan is an indicator of where the hash rate will be moving in the near future. In CriptoNoticias we recently reported, that some bitcoin mining companies that were in China, have closed deals to relocate to the United States and Canada. These deals already seem to be positively reflecting on the processing power of Bitcoin miners.

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