US Bitcoin Mining Lead Over China Confirmed as Major Pools Shut Door on Chinese Users
New data from the latest update to the Cambridge Bitcoin Electricity Consumption Index (CBECI) at the Cambridge Centre for Alternative Finance (CCAF) has confirmed that the leading share of global Bitcoin network hashrate now sits in the US.
The geographic shift happened barely two months after China banned crypto mining activities within its borders in May 2021, the Index shows, highlighting its being the first time for their dataset to record the seasonal hashrate migration within mainland China.
It shows miners who stay mostly in the more stable coal-fired regions like Xinjiang during the dry season and migrate to regions with significant temporary overcapacities in low-cost hydropower, like Sichuan, during the wet season are no more.
“Since the government crackdown on the mining industry in June 2021, no data has been available – and the migrations have likely become a phenomenon of the past,” a part of the findings from the Bitcoin mining map of the CBECI states.
The US and China have always been the two most represented countries in CCAF studies. In its 3rd Global Cryptoasset Benchmarking Study released last year, a focus on cost structure data seems to confirm that Chinese hashers have a competitive edge in the acquisition of mining machines for the concentration of hardware manufacturers in China.
The study suggests well-connected and shorter supply chains to Chinese hashers, simplified business conduct (e.g. language, working culture), and absence of additional overseas shipping fees though labour and maintenance costs do not seem to differ significantly between the two regions.
However, the Chinese edge seems to have somewhat been rendered irrelevant by the new CBECI data which is current up to the end of August 2021. It shows the US now has a global hashrate share of 35.4% (up from 16.8% at the end of April), Kazakhstan with 18.1% (up from 8.2%) and the Russian Federation with 11% (up from 6.8%).
Others with large shares are Canada (9.55%), Ireland (4.68%), Malaysia (4.59%), Germany (4.48%), Iran (3.11%) and Norway (0.58%). The hashrate distribution shift can be considered a positive development for network security and Bitcoin’s decentralisation, the Index’s authors say.
From a high of 75.53% of the world’s total Bitcoin mining in September 2019 when the Index was first published, China’s share of hashrate collapsed to 0% by June 2021 as its remaining 38% share before the May clampdown dropped off. The Index suggests that Chinese miners ceased their mining operations simultaneously.
While the hashrate trajectory indicates as at early October that all, or nearly all, of the June drop would be fully recovered soon, the Index suggests that the recovery will likely be further distributed predominantly between the largest share gainers – US, Kazakhstan and the Russian Federation – if the August data updates are anything to go by.
Nonetheless, the end does not seem to be in sight. More crypto mining-related activities continue to add to the list of the Chinese government-mandated ban. Due to the recent development in local regulation, F2Pool announced last week that it has ceased to provide mining pool services in mainland China. Known as the first mining pool in China and currently the largest multi-currency mining pool in the world, F2Pool says it plans to complete the shutdown process to users by December 31.
Bitmain’s BTC.com pool followed suit. It issued a notice stating that it is withdrawing from the Chinese market on October 15, 2021 and to no longer provide services to Chinese mainland mining users afterwards.