Currency | 10 November 2021 | Fergus Halliday <
Currency
|
Chinese crackdown paves way for crypto mining migration
China is no longer the biggest contributor to the global hash rate.
Following years of crackdowns by the Chinese government, many of the world’s biggest bitcoin miners have relocated elsewhere.
According to the latest Cambridge Bitcoin Electricity Consumption Index (CBECI), the United States now holds the leading share of global bitcoin hash rate.
The hash rate is a metric used to measure the total level of computer processing power being used to mine cryptocurrencies across the world.
Back in September 2020, China was estimated to account for as much as 75 per cent of the global hash rate. That figure declined to 38 per cent in June 2021, following a crackdown by the government.
Now, data published by BTC.com, Poolin, ViaBTC and Foundry suggests that the hash rate for the region has fallen to almost zero.
With a 35.4 per cent share of the global hash rate, the US is the new frontrunner for crypto mining. The country’s share of the BTC hash rate has more than doubled since April 2021, with profound impacts on the stability of the cryptocurrency network.
Cointree CEO Shane Stevenson said that China’s scrutiny may actually end up strengthening the network in the long run.
“Before the ban, one of bitcoin’s weakest vectors of attack was that so much of the mining power was concentrated in China, making a 51 per cent attack more possible,” he explained.
Mr Stevenson suggested that China’s recent scrutiny of cryptocurrencies may have played a role in recent surges in the price of bitcoin, with savvy investors recognising the upside to the crackdown.
“In the short term, we don’t see much of an impact on prices as most of the risk of a China ban was priced in when China banned crypto the first three times. At this point, investors either see it as an empty threat or more likely, have already factored in this outcome,” he said.
Behind the United States, Kazakhstan ranked second at 18.1 per cent, while Russia accounted for 11 per cent of the global hash rate. Both countries doubled their market share in parallel to China’s decline.
Kraken Australia managing director Jonathan Miller said that the United States’ ascendancy when it comes to bitcoin mining is hardly a surprise given ongoing crackdowns by the Chinese government.
“It was expected that migration would occur, particularly to locations where renewable energy is cheap and plentiful,” he said.
Given that many miners in North America rely on hydroelectric power, Mr Miller suggested that the shift would improve the overall energy consumption and carbon impact of the BTC blockchain.
“The US digital asset industry is likely to take advantage of this boom, attracting more talent and investment, leading to more jobs, business, income and tax revenue,” he predicted.
Mr Miller said that if the same conditions could be replicated in Australia, the region could reap many of these same economic benefits.
Compared to the US hash rate of 35.4 per cent, Australia’s hash rate is a paltry 0.19 per cent.
“There is a big, missed opportunity here for us, but it isn’t too late to invest in more renewable energy and increase our own share of the BTC mining pie,” he said.
