In recent times, China has made moves to halt all forms of Bitcoin mining in its vicinity. According to the government, the operation is consuming more energy than necessary.
There have been concerns on how the crackdown will affect crypto prices, given that other countries also picked up the trend. China’s action led to a mass exodus of miners away from Asian countries to Western countries.
According to Cambridge research, it seems that China had started losing its mining power way before the scrutiny on energy consumption by mining activities. The research revealed that China lost 40% of its BTC mining power even before the imminent crackdown.
The trend started in September 2019 when the country’s hash rate fell from 75.5% to 46% in the fourth month of 2021. This was even before China announced that it is stopping mining operations in the country.
Other Countries Record An Increase in Bitcoin Hash Rate
While China is losing mining power, the United States’ mining power has quadrupled. The country was only recording a 4% global hash rate before now.
Although, within the same eighteen-month period, it has gained an additional 12.8%, totally a global hash rate of 16.8%. Currently, United States is standing as the second-largest Bitcoin producer in the world.
Despite the crackdown, BTC has been gaining momentum, however, that momentum seems to be fading | Source: BTCUSD on TradingView.com
Another country that gained more mining power, is Kazakhstan. The Crypto community often regards the country as a miners’-friendly location. During this same period, it gained mining power and increased its hash rate to 8%.
A Brief On China’s Crackdown
The country’s interest and scrutiny in the crypto mining operation started in April. There had been a series of constant power outages in Xinjiang, where miners base their operations. As a result, the authorities began investigating the level of energy they’re consuming during Bitcoin mining.
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Chinese officials then announced that they would start supervising the mining activities in the region, given the rising concerns of carbon emanating from the activities. These plans triggered a mass exodus out of the country as miners left.
While reacting to this crackdown, the CEO of iMining, Khurram Shroff, called the whole experience a “temporary inconvenience.” According to him, it is best to diversify mining locations to several parts of the world.
He went further to reference the recent development in Toronto as its Stock Exchange-listed the first Bitcoin ETF. Shroff also mentioned that Canada is already leading the pack in mainstreaming cryptocurrencies.
However, many experts in the crypto industry believe that China used Bitcoin mining as an opportunity cost for something greater.
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According to what Bitmain’s EMEA partner mentioned to our source, China needed funds from the World Bank or the International Monetary Fund. But to access such funding, they had to reduce the carbon emission in the country. So, China decides that Bitcoin mining is the easiest activity to crackdown on to get what they want.
But for now, China residents can hold Bitcoin but the country no longer allow the operations of mainland exchanges or any form of Initial coin offerings.
Featured image from Pixabay, chart from TradingView.com