Yahoo Finance Bitcoin mining operations rise in US and Kazakhstan after China ban
The US and Kazakhstan are seeing a surge in bitcoin mining operations after crackdown on the process in China, reveals new data on global energy consumption for the process.
Bitcoin mining is a digital process which generates new units of the virtual currency by solving complex mathematical equations and requires energy-intensive computer operations.
Months before the crackdown on cryptocurrency mining in China in May, experts had noted that infrastracture development for the process in the country came to a standstill in anticipation of an official ban.
According to new data from the Cambridge Centre for Alternative Finance (CCAF), the fraction for the total combined computational power used to mine and process bitcoin transactions – known as the hashrate – had declined in China from about 76 per cent in September 2019 to 45 per cent in April 2021.
China's share of total hashrate has been in continuous decline some time prior to the recently-announced government crackdown on the mining industry, dropping from a whopping 75.5% in September 2019 to 46% in April 2021. /5 pic.twitter.com/zNubtFRbMh
— Michel Rauchs (@mrauchs) July 15, 2021
During this period, the hashrate for the US rose from about 4 per cent to 17 per cent, while that of China’s neighbour Kazakhstan rose from 1.4 to 8.2 per cent making its bitcoin mining operations the third largest in the world.
The analysis, according to CCAF, was based on data from four bitcoin mining pools across the world that represent between 32 and 37 per cent of the total hashrate over the examined period.
According to Peter Wall, chief of crypto mining company Argo, many Chinese bitcoin miners are moving equipment and setting up operations in the US.
The hashrate in Canada has also grown from 1 per cent in September 2019 to 3 per cent in April this year.
Displaced Chinese miners are searching the globe for appropriate hosting sites for their machines, and that means, in places like North America, access to power for mining (especially renewable) is getting harder and harder to find.
Interesting times.— Peter Wall (@PeterGWall) July 3, 2021
Experts say the mass exodus of cryptocurrency mining out of China following the country’s crackdown on the process since May 2021 could only make the US share of the mining market only bigger.
“A majority of the new equipment manufactured from May 2020 through December 2020 was shipped to the U.S. and Canada,” Mike Colyer, CEO of digital currency company Foundry, told CNBC News.
This suggests that China had already become less attractive for new mining operations, which preferred setting up shop overseas.
The USA and Kazakhstan have been the largest beneficiaries of these developments, increasing their share to 16.8% and 8.2%, respectively. /7— Michel Rauchs (@mrauchs) July 15, 2021
However, only 1.4 per cent of Kazakhstan’s energy supply comes from renewable sources and most of its electricity is produced from fossil fuels such as coal and natural gas, while renewables contribute to about 11 per cent of US electricity.
Despite this shuffle, more than half of mining operations worldwide have stopped operating and the entire global network of miners who were using 132 terawatt-hours of energy in mid May, used only 59 TWh early July.
According to Michel Rauchs from CCAF, while gains noted in other countries before the Chinese crackdown could be an indicator, further data and insights are needed to confirm this exodus.
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