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China outlawed Bitcoin mining last May. Exactly a year later, the country has re-emerged as the leading venue for mining operations.
A new study revealed underground mining activity in the country had catapulted it to second place globally in terms of installed mining capacity.
China’s Apparent Comeback
Cambridge Centre for Alternative Finance (CCAF) reported the surprising resurgence and further stated that China currently dominates with a 21.11% market share just behind the US with 27.69%. On the other hand, countries that were earlier perceived as stronger Bitcoin mining hubs, such as Kazakhstan, Canada, and Russia, are trailing far behind with 13.22%, 6.48%, and 4.66%, respectively.
The reported mining hash rate for the entire country effectively went to zero during the months of July and August, as per the Cambridge Bitcoin Electricity Consumption Index (CBECI).
In the following month, the reported hash rate suddenly climbed back to 30.47 EH/s. According to the study, this trend demonstrated that significant underground mining activity has transpired in the country, which “confirms what industry insiders have long been assuming. ”
The CCAF stated,
“Access to off-grid electricity and geographically scattered, small-scale operations are among the major means used by underground miners to hide their operations from authorities and circumvent the ban.”
The swift recovery in China’s mining activity can be attributed to miners concealing their location by leveraging virtual private networks (VPN) or other proxy services. The study also argued that as time passed, Chinese underground miners have become more confident with the protection offered by local proxy services to cover their tracks.
Shift in Bitcoin Mining Landscape
The global Bitcoin mining landscape has transformed significantly after China’s ban. The US, for one, has continued to cement itself as the leader by a wide margin. However, other countries except for Canada, which only saw moderate growth, are yet to prove as favorable destinations for miners.
Russia suffered a considerable drop in relative hash rate share from 11.23% in August 2021 to 4.66% in January 2022. During the same period, the country also saw a substantial decline in terms of total installed mining capacity contribution from 13.56 EH/s to 8.74 EH/s.
Kazakhstan, once considered an attractive country for Chinese Bitcoin miners, saw its market share decline due by 13.22%, partly due to power shortages and political pressure. Its governement earlier imposed stricter rules for mining companies and also increased tax burdens on miners.
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