Two months after Beijing banned crypto mining this year, the United States has overtaken China as the largest source of bitcoin mining, according to new data.
China’s share of the global hashtag – the computational power needed to make bitcoin – fell to 44 percent from May to July, according to figures released by the Cambridge Center for Alternative Finance on Wednesday. The country is responsible for three-quarters of the global hashtag in 2019.
The U.S. share of global hashtags increased from 17 percent in April to 35 percent in August, while Kazakhstan grew by 10 percent to 18 percent.
China’s state council or cabinet banned cryptocurrency mining and trading in May, citing environmental and financial concerns. The decision prompted miners to emigrate in search of cheap power and crypto-friendly politicians.
China’s bitcoin mining ban has led to “Great Mining Migration,” said Sam Tabar, chief strategy officer at Bit Digital, a New York-based bitcoin mine. The company has suspended its operations in China, which was shut down in October 2020 following the ban.
Michelle Rauch, digital resources leader at Cambridge Tracker, noted that the impact of the Chinese crackdown has been an increased geographic distribution of hashtags around the world, and that this could be seen as a “positive development for network security” and a “decentralized policy of bitcoin”.
Miners outside China have enjoyed digging a digital coin in the months following the ban, as Chinese competitors rush to shift their operations.
Beijing has gone further since last month, marking all crypto-related activities as “illegal” and increasing restrictions on the inclusion of foreign operators.
China is launching its own digital currency, which authorities expect to test at the Beijing Winter Olympics in February 2022.
“China is closed to industry and U.S. miners,” said Fred Thiel, chief executive of Marathon Digital Holdings, a Las Vegas-based crypto mining company. “Overnight, fewer players were going after the same limited number of coins.”
On average, 900 bitcoins are mined every day by machines that run to solve complex mathematical arithmetic problems that unlock new digital coins. Between July and September, Marathon Digital Holdings produced 1,252.4 minted coins, up 91 percent from the previous quarter.
But Thiel said competition has intensified as Chinese miners have settled, especially in Kazakhstan. “We are back to where we were before the shutdown, so I hope the situation will stabilize,” he said.
But scattered miners have also faced roadblocks to their new homes, raising the challenge of identifying predictable policy environments for digital currency companies as concerns grow over the financial oversight of the sector.
“Immediately after the ban, Kazakhstan received a lot of mining machines, mostly from Chinese mines, who wanted to start work as soon as possible,” said Didar Bekbauv, co-founder of the Almaty-based cryptocurrency mining platform Xive.
Authorities have blamed exiled crypto hunters for the recent energy crisis, slapping power-hungry miners with surcharges for using electricity. The Kazakh government has also passed a cryptocurrency mining tax that will take effect in 2022.
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