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China Accounts for 65 Percent of Bitcoin’s Hash Power, New Research Reveals

An interactive map published by the University of Cambridge’s Alternative Finance Center (CCAF) revealed Chinese miners accounted for 65 percent for the global hashing power used by Bitcoin.

China dominates Bitcoin mining

The CCAF tracked mining data for over a year from websites like BTC.com, ViaBTC, and Poolin, with the premier university claiming the map is the first-of-its-kind effort in visualizing hash power data by geography.

Apart from real-time statistics, the map stores historic data from 2019, but additional information will be continually updated. The US and Russia account for 7 percent of hash power each, with lots of smaller operations in South America, Europe, and even New Zealand.

Interestingly, over 65 percent of hash power originates from China, which is graphically displayed in another map cause of the country’s sheer size. Of this, over 35 percent is concentrated in the Xinjiang region, with 10 percent in Sichuan, 8 percent in Mongolia, and a paltry 1.63 percent in Beijing. The graph below shows:

Source: CCAF

Inner China’s mountainous region, cool climate, access to cheap electricity, and labor has led to the rapid development of the mining industry in the country since 2012. Firms like Bitmain and AntPool dominate hash power for Bitcoin, with the former a major seller of mining equipment.

Meanwhile, the researchers noted several miners used VPNs to mask mining information and protect their privacy, leading to certain locations “hard to pin down.” However, to combat any major dislocation of data, the CCAF divided the high hash rates found in Zhejiang province proportionally among other provinces listed in the pool’s dataset.

Despite not formally recognizing cryptocurrencies, China’s firmly establishing itself as a major player in Bitcoin mining and blockchain development. But, as Blockchain.News reported previously, with the recent launch of its CBDC, the country is primed for greatness in the upcoming cryptocurrency and blockchain era.

Image via Shutterstock

Bitcoin Mining in China Dropped before the Latest Crackdown

New research conducted by the Cambridge Centre for Alternative Finance (CCAF) shows that Bitcoin mining in China has already nosediving even before the government started cracking the whip on crypto mining in May.

China’s Bitcoin mining dominance slumps

According to coverage from BBC, citing a study by the CCAF. The announcement stated:

“China’s share of mining fell from 75.5% in September 2019 to 46% in April 2021.”

Many BTC miners are in favour of China because of cheap electricity and technological advancements compared to other nations. A previous study by UK-based company CoinShares noted that up to 66% of global hashrates came from and were controlled by Chinese entities.

The hashrate is used to measure the processing power of the BTC network. It, therefore, allows computers to process and solve problems that would enable transactions to be approved and confirmed across the network.

It, thereby, shows that things were not rosy for the BTC mining sector in China even before authorities intensified restrictions, which have led to the disconnection of more than 90% of the nation’s crypto mining capacity.

China’s mining power disappears overnight

The Cambridge researchers noted that the enactment of the crackdown made China’s mining power disappear overnight as miners and their equipment were on the move.

Recently, Anhui, an eastern Chinese province, became the latest region to shut down all crypto mining activities, citing an acute power shortage.

Yet, the United States and Kazakhstan have reaped big from the intensified Chinese crackdown on crypto mining. The US saw its share of hashrate skyrocket to 16.8% from just over 4%, whereas hashrate in Kazakhstan shot up to around 8%.

Russia and Iran are the other beneficiaries. Bitmain, a leading maker of crypto mining equipment, halted its sales in China last month and searched for power supplies in other places like Kazakhstan, Russia, and the US.

Underground Bitcoin Mining Pushes China to 2nd Spot in Terms of Hashrate, Study Reveals

The ban on cryptocurrency mining by the Chinese government has not shelved mining activities in the country.

New data from the Cambridge Centre for Alternative Finance (CCAF), which publishes the Cambridge Bitcoin Electricity Consumption Index (CBECI), shows that China now ranked second in terms of the total hashrate emanating from the region from September 2021 to January this year.

The uptick in China’s mining activities is reportedly fueled by a complex ring of underground mining activities, which is fueled by the adoption of proxy mining pool services providers.

The data “strongly suggests that significant underground mining activity has formed in the country,” the CCAF said in a statement. “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.”

While China recorded a Zero hashrate last year from June to July following the enactment of the Bitcoin mining ban in May, the CCAF said logistics challenges took the underground miners a few months to re-organize to continue their activities in a covert manner.

“It takes time to find existing or build new non-traceable hosting facilities at that scale,” CCAF said. “It is probable that a non-trivial share of Chinese miners quickly adapted to the new circumstances and continued operating covertly while hiding their tracks using foreign proxy services to deflect attention and scrutiny.”

While the United States is still in the lead with respect to the total hashrate recorded, China held up to 22.3% of the combined hashrate within the period under review.

According to insiders who spoke to the South China Morning Post (SCMP), underground miners make use of Virtual Private Network (VPN) to shield their exact locations. Additionally, they tend to use different energy service providers so that the energy consumption from a particular location is not made obvious.

The Chinese government is still very strict with its ban, and while sanctions await violators of the ban rules, there is no evidence that the covert miners are ready to stop their activities for now.