chinese bitcoin miners
Even after last year’s Bitcoin mining ban in China, the nation remains second only to the U.S. in terms of capacity.
China has reemerged as a major Bitcoin mining hub, with covert miners accounting for more than one-fifth of the network’s hash rate, according to data from the Cambridge Digital Assets Programme (CDAP).
The CDAP is a public-private research initiative being hosted by the Cambridge Centre for Alternative Finance (CCAF), known for its widely cited Bitcoin Mining Map.
The Chinese government issued a sweeping Bitcoin mining ban in June 2021. At the time, it was the latest attempt by authorities there to stamp out mining activity after having been at odds with the industry for years. In September 2020, Chinese-based Bitcoin miners accounted for 67% of all network activity.
Over several weeks last May and June, authorities started cracking down on Bitcoin miners and the network hashrate plummeted, at one point falling to 57 exahashes per second (EH/s). But as miners relocated, it recovered to pre-ban levels by December, and in February set an all-time high of 248.11 EH/s.
Hashrate is a measure of total computing power on a blockchain. Each hash represents a “guess” at a cryptographic string. The one who correctly guesses it wins the right to verify a block worth of transactions and add it to the blockchain. One exahash represents one quintillion such guesses.
The report suggests that a sizable portion of Chinese Bitcoin miners found ways to adapt to the ban, using foreign proxy services to hide mining activity, rather than leaving the country. New CCAF data shows that China, accounting for 21% of Bitcoin hashrate, has become second only to the U.S., which now accounts for 38%.
“As the ban has set in and time has passed, it appears that underground miners have grown more confident and seem content with the protection offered by local proxy services,” CDAP’s report says.
Even before China’s ban took effect last year, U.S.-based Bitcoin miners were outpacing overall network growth. The U.S. doubled its share of the Bitcoin network hashrate, from 11% to 22%, in the first half of 2021, according to CDAP.
Installed Bitcoin mining capacity in the U.S. reached 70.97 EH/s this January, a 66% increase from August. The uptick in the states has been so significant that CCAF has added a U.S. Bitcoin mining map to its index. It shows that Georgia (31%), Texas (11%), and Kentucky (11%) combine to account for more than half the country’s overall hashrate.
CDAP also reported that it’s beginning work on a model to estimate the Bitcoin network’s greenhouse gas emissions after finding that last year’s ban in China actually seems to have worsened mining’s environmental impact.