China Regains Bitcoin Mining Hub Status — Hashrate Dominance Shifts to US
China Reclaims Mining Hub Status, But US Holds Hashrate Lead. (Photo by Manuel Romano/NurPhoto via Getty Images)
Key Takeaways
- Chinese Bitcoin miners contribute 55% of the BTC hashrate despite a mining ban in 2021.
- China’s mining ban brought the country’s mining industry to a standstill, but not for long.
- Within a year of the ban, China reclaimed 21% of the BTC network hashrate and more than doubled it in two years.
China is back at the top of Bitcoin hashrate contribution by countries, just three years after a blanket ban on all mining operations. However, the good news is that the United States is sharply climbing up the hashrate ladder, challenging China’s dominance.
The Bitcoin hashrate refers to the computational power that miners use to validate and process transactions on the Bitcoin network. It is a standard that measures the number of calculations mining equipment can perform in a second.
When discussing network hashrate contribution by country, the term denotes the combined power input of miners from a particular country.
China Reclaims Top Bitcoin Mining Spot, but U.S. Is Rising
According to data shared by CryptoQuant CEO Ki Young Ju, China now controls 55% of the Bitcoin network hash rate, a 55% increase in three years since the blanket ban in 2021. However, at the same time, the US mining dominance is on the rise, now at 40%.
After China’s mining ban, the US became the largest contributor to the Bitcoin network’s hashrate. The ban also prompted several large-scale mining farms from China to relocate to the US and other neighbouring countries with cheaper electricity costs.
In his X post, Ju noted that mining dominance is shifting to the US . The CryptoQuant CEO noted that the US is a major hub for large mining operations catering to institutional clients. On the other hand, Chinese mining operations are mostly small scale to avoid coming under the government’s radar.
Over the past few years, many mining companies have set up large industrial-scale Bitcoin mining operations comprising thousands of mining machines. Many of these mining companies have also gone public, such as Riot, Hive, Marathon Digital, and more.
Crypto mining enthusiasts on social media pointed out that mining machines are more readily available now. Thus, miners are now chasing the cheapest sources of energy rather than the most powerful machines, and as a result, more miners are moving out of China.
Can Chinese Miners Keep Up With the Rest of the World?
China was the largest Bitcoin mining hub until 2021. In 2019, the country contributed over 75% of the BTC network hashrate. At the end of July 2021, Chinese miners contributed more than 60% of the network hashrate.
However, in August 2021, the Beijing government imposed a blanket ban on all crypto-related activities and a heavy crackdown on mining operations, both small and large.
As a result, the Chinese hashrate contribution dropped to nearly zero post-ban. The ban also resulted in one of the largest drops in the Bitcoin network hashrate.
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However, the ban didn’t last long, as Chinese crypto miners found a way to overcome the mining crackdown.
By May 2022, China was contributing 21% of the Bitcoin network hashrate, and within two years, it had more than doubled its mining power.
While Chinese miners have managed to deceive authorities, as evidenced by the rising mining power, the real question is, for how long?
With the US rising as an institutional hub, especially after the approval of Bitcoin exchange-traded funds (ETFs) and Russia legalizing Bitcoin mining, China might not be able to reclaim its mining dominance as it did before 2021.
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