China is experiencing an unprecedented challenge to its status as an undisputed crypto mining sector lodestar.
New research data indicates that the United States has become the world’s largest bitcoin mining hub, overtaking China for the very first time. This comes as China’s contribution to the bitcoin mining hashing power declines significantly following the government’s ban imposed earlier this year.
The U.S Takes The Lead
A year ago, China was the hashrate leader — without a doubt. The situation has, however, changed dramatically in recent months.
According to data from Cambridge Centre for Alternative Finance (CCAF), bitcoin mining activities in China have slumped essentially to zero, following the exit of the majority of miners from the nation after Beijing regulators imposed a harsh clampdown on crypto mining.
The immediate impact of the ban was a 38% fall in the global hash rate — a term that refers to the computing power of miners — in June 2021. This corresponded to China’s share of the global hash rate prior to the country’s ramp-up of repression of decentralized cryptocurrencies.
The Cambridge University researchers found that the U.S. now controls 35.4% of the global hashrate share as of August 2021. Besides cheaper electricity costs, some states in the United States, including Texas, Wyoming, New York, among others, have crypto-friendly policymakers who have offered tax exemptions and other incentives to attract crypto miners.
Kazakhstan is the second-biggest contributor to the bitcoin mining hashrate at 18.1%. Russia follows with a share of 11% of all crypto mining. Germany (4.48%), Iran (3.11%), Malaysia (4.59%), Ireland (4.68%), and Canada (9.55%) are other notable contributors.
How The Bitcoin Mining Scene Has Changed Since The China Ban
China is infamously known for issuing restrictive prohibitions on crypto since 2017. As if that weren’t enough, the People’s Republic of China announced a sweeping ban on bitcoin mining earlier this year. That ban resulted in miners switching off their mining rigs and fleeing China in search of friendlier jurisdictions. A majority of them ended up in America.
In April, the U.S. accounted for only 16.8% of bitcoin’s hash rate — indicating that the U.S market share has registered a staggering 105% growth. As the interest in crypto mining balloons in the U.S, sales for ASIC mining rigs have also surged. Today, Bitmain secured a deal with New York-headquartered mining firm Bit Digital to supply 10,000 Antminer machines.
In a similar fashion, Kazakhstan and Russia have also increased their shares of the global crypto mining market: 120% and 61% increases respectively.
Moreover, the global hash rate recovered 20% within July and August. According to CCAF’s digital assets lead Michel Rauchs, the hashing power has almost recovered fully as miners set up shop away from China. And even more interesting, pundits view the migration of miners from China as a blessing in disguise for bitcoin as it has contributed to making the network more decentralized and secure.