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UK Research Shows 66% Control of Hash Rate is Coming From China

Decentralization and blockchain are two words that many purists believe must be put together to be the future of financial technology.

Reporting on a study developed by UK based company CoinShares, as much as 66% of global hash rates come from and are controlled by Chinese entities.

Mining is a crucial element in distributed ledger technology, allowing the blockchain and all cryptocurrencies on top of it, to run and function normally. Without computers confirming transactions, and supplying power to the system, the blockchain would not be able to function as intended.

Hash rate, or network power, allows computers to process and solve problems that would enable transactions to be approved and confirmed across the network. When more miners join the Bitcoin network, more computational guesses per second are needed in order to find the solution. As a result, the hash power will increase and Bitcoin’s network difficulty will go up.

According to the research from CoinShares, numbers show that as of 2017, China continues to grow its power and percentage in global mining, rising to 60% as measured in June 2019. Chinese provinces, including Yunnan, Xinjiang, and Inner Mongolia, as well as Sichuan, make up as much as 50% of this total hashing power.

Cheap electricity and technological advancement are being touted as to why the growth has been so drastic compared to other countries.

Chris Bendiksen, head of CoinShares research, commented: “This is beneficial to the Chinese mining industry […] If you are the first to increase your proportion of the hash rate, and you can do that before your competitors, that’s generally good.”

China is well known for its mining companies, recent statements, and blockchain development goals.

As said at the beginning, decentralization, and blockchain is what many views as the only way forward. Will China and its aim for global dominance mean change for what the future holds, or is it too early to tell?

Image via Shutterstock

Bitcoin Mining Pools Negatively Impacted as Northwest China Undergoes a Complete Blackout

The hashrate of various Bitcoin (BTC) mining pools dropped due to the blackout impacting Northwest China.

Pseudonymous Chinese reporter tweeting under “Wu Blockchain” explained:

“The hashrate of Bitcoin mining pools plummeted in 24 hours. Antpools fell by 24.5%, BTC.com fell by 18.9%, Poolin fell by 33%, Binance pools fell by 20%. The reason is that Northwest China is undergoing a complete blackout for safety inspections.”

These inspections have been prompted by security accidents in various coal mines in China triggered by flooding and gas explosions, according to Chinese state media Xinhua. Therefore, the seriousness of these incidents has necessitated the intervention of relevant authorities.

66% of global hash rates come from China

According to a study by UK-based company CoinShares, as much as 66% of global hashrates come from and are controlled by Chinese entities. Technological advancements and cheap electricity are some of the factors that favour Bitcoin mining in China compared to other nations.

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.

When more miners join the Bitcoin network, more computational guesses per second are needed in order to find the solution. As a result, the hash power will increase, and Bitcoin’s network difficulty will go up.

Bitcoin’s dominance and price

Crypto analyst Lark Davis has disclosed that Bitcoin’s dominance has been falling in the current period despite its price rising. He explained:

“Bitcoin dominance has fallen down to 53%, a critical area of support! Altcoin season in full swing! Crazy thing is that the price of BTC has kept rising during this time.”

BTC recently exploded and hit a new all-time high of above $64,000, even though it has retracted to $61,485 at the time of writing, according to CoinMarketCap.

Bitcoin Mining Difficulty Hits a 7-Year High

Bitcoin Mining Difficulty hit a 7-year high Thursday, according to data from Glassnode.

The on-chain metrics provider said:

“Bitcoin mining difficulty has increased by 21.5% today. It is the largest positive difficulty adjustment in almost 7 years.”

The level of Mining Difficulty is determined by the amount of computing power consumed by the BTC network and is measured by the use of hashrate. This measure allows computers to process and resolve problems that would enable transactions to be approved and confirmed across the network.

In other words, if more miners are to join the BTC network, more computational guesses per second are needed to find solutions. As a result, the hash power will increase, followed by the level of Bitcoin Mining Difficulty, which will go up.

Earlier last month, the hashrate of various BTC mining pools dropped due to a regional blackout in Northwestern China.

Cost of insuring Bitcoin spikes

According to crypto data provider Skew:

“Cost of insuring against a 20%+ correction of Bitcoin over the next three months has spiked with the overnight sell-off.”

The price of Bitcoin (BTC) tanked by nearly $10,000 from $55k to $46k on Thursday, although this leading cryptocurrency regained some momentum to trade at $49.6k at the time of writing.

The market believes that the dropping price was mainly a result of FUD (fear, uncertainty, and doubt). For example, Tesla, the American electric car manufacturer, decided not to accept BTC payments due to environmental reason, revealed by the company’s CEO Elon Musk recently.

Tesla attributed this to the “rapidly increasing use of fossil fuels for Bitcoin Mining and transactions, especially coal, which has the worst emissions of any fuel.” However, Telsa’s decision was also pushing the insurance cost against BTC corrections upwards.

BlackRock’s CIO, Rick Rieder, believed that these challenges are real even though they will be handled quickly. He added that Bitcoin is durable and will be part of the investment arena for years to come.

Bitcoin Miners’ Wallet Net Flows Are Increasingly Turning Negative

Bitcoin (BTC) experienced a sharp correction that drove the price to lows of $30k after enjoying a remarkable bull run, which pushed the price to an all-time high (ATH) of $64,800 in mid-April.

Bitcoin miners have been on the receiving end because this market crash slashed their profit margins.

As a result, their miner wallet net flows have been increasingly turning negative, as acknowledged by Dilution-proof. The on-chain data firm explained:

“Bitcoin miners are in pain due to the price crash cutting into their profit margins. Since the start of Elon’s tweets on May 12, the hash rate has dropped; likely miners being turned off. That is now stabilizing, but miner wallet net flows are increasingly turning negative.”

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

When more miners join the Bitcoin network, more computational guesses per second are needed to find the solution. As a result, the hash power will increase, and Bitcoin’s network difficulty will go up.

Reportedly, Bitcoin miners liquidated their holdings by selling at least 5,000 BTC last week.

On-chain activity on the BTC network plunge

According to crypto data provider Glassnode:

“On-chain activity on the Bitcoin network has dropped off, as investors become uneasy around the market direction.”

Furthermore, crypto exchanges have experienced significant BTC outflows, as acknowledged by market analyst William Clemente III. He noted:

“Exchanges now down over 30,000 BTC in the last 3 days.”

Meanwhile, El Salvador became the first nation to accept Bitcoin as legal tender. This move is expected to boost the country’s economy by generating new jobs and availing financial inclusion, given that 70% of the populace does not have access to traditional financial services.

Bitcoin Mining Might Become More Easier and Lucrative Following China’s Crackdown

While Chinese authorities were intensifying the Bitcoin (BTC) mining crackdown, some crypto experts believe this might be a blessing in disguise to this sector.

The Chinese administration recently massively disconnected BTC mining sites in Sichuan Province, triggering a price drop in the crypto market.

BTC mining expected to be more profitable

According to the announcement:

“Crypto experts say that, with more Bitcoin miners going offline due to China’s restrictions, other miners’ share of the network will increase, potentially making mining much more lucrative.”

Kevin Zhang, the vice president of crypto mining firm Foundry, added:

“As more hashrate falls off the network, the difficulty will adjust downwards, and the hashrate that remains active on the network will receive more for their proportional share of the mining rewards.”

Therefore, Bitcoin miners who remain active after post-China’s crackdown are anticipated to find it easier and more lucrative, given that once more miners away from the Bitcoin network, fewer computational guesses per second are needed to find the mathematical solution. As a result, the hash power will reduce, and Bitcoin’s network difficulty will go down.

Bitcoin’s hashrate slumps

According to Blockchain.com data, BTC’s hashrate nosedived from a record-high of 180.7 million terahashes per second hit in mid-May to approximately 116.2 million as of June 23.

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

Over 90% of BTC mining capacity was reportedly lost in China due to the Chinese authority intensified clampdown actions.

As a result, many miners migrated out of China to nearby countries to set up new mining facilities. BTC miners were forced to sell their holdings to get the needed capital to establish the necessary facilities.

Yet, it remains to be seen how this sector shapes up moving forward.

Bitcoin Mining Geographical Distribution Shifts as U.S. Becoming the Biggest Beneficiary

Things were not rosy for Bitcoin (BTC) mining even before the Chinese authorities intensified the crackdown on this sector in May.

Recent research conducted by the Cambridge Centre for Alternative Finance (CCAF) indicates that China’s share of mining fell from 75.5% in September 2019 to 46% in April 2021.

As a result, BTC mining has become more geographically distributed, as acknowledged by Documenting Bitcoin. The crypto analytic firm explained:

“Bitcoin mining is becoming more geographically distributed—China now has less than 50% of the total hash rate, with the United States being the largest beneficiary. Like the open Internet, a wealth transfer from East to West.”

Therefore, the United States has emerged as the biggest beneficiary, and the BTC mining sector seems to be shifting from the East to the West.

These sentiments were echoed by the CCAF study, which disclosed that the US share of hashrate skyrocketed to 16.8% from just over 4%. Kazakhstan, Russia, and Iran were the other beneficiaries.

Bitcoin’s hashrate fell by 52.5% following the Chinese ban

According to on-chain metrics provider CryptoCompare:

“Following China’s ban, BTC’s hash rate fell by 52.5% – from 181.61Mn TH/s on May 13 to 86.19Mn TH/s on July 2. These levels haven’t been seen since 2019 when the hash rate averaged 90.45Mn TH/s.”

On July 14, Anhui, an eastern Chinese province, became the latest region to shut down all crypto mining activities, citing an acute power shortage.

Some crypto analysts had previously acknowledged that BTC mining might become more profitable and more accessible following China’s ban and the US looks set to reap big from this development.

Bitcoin’s Hashrate Rebounding after Engaging a 50% Drop

The hashrate of Bitcoin seems to be on an upward trajectory after nosediving by 50% amid intensified crackdowns on crypto mining by Chinese authorities recently.

Crypto data provider CoinMetrics explained:

“China’s sudden crackdown on mining in Q2 2021 left miners with no choice but to shut down operations and move elsewhere. Bitcoin’s hash rate fell by ~50% as a result, but appears to be rebounding (2-wk ma).”

The function of hashrate mainly measures the processing power of the BTC network. It allows computers to process and solve problems that would enable transactions to be approved and confirmed across the network.

Chinese authorities’ unfriendly stand against Bitcoin mining

BTC mining continues to be rejected and unwelcome on Chinese soil. For example, Anhui, an eastern Chinese province, became the latest region to shut down all crypto mining activities mid this month, citing an acute power shortage.

In June, Chinese authorities disconnected BTC mining sites in Sichuan. As a result, more than 90% of China’s crypto mining capacity was hampered.

On-chain metrics provider Cryptocompare acknowledged:

“How much impact did China’s BTC mining crackdown really have on hash rate and block times? The short answer – A lot! Hash rate fell 45% from an avg of 163.93TH/s to 89.52TH/s in July. Bitcoin block times also passed the 20 min mark for the first time – peaking at 23 mins!”

Bitcoin’s hashrate seems to rebound as Bitcoin mining is shifting from the East to the West, while the U.S. is emerging as the biggest beneficiary.

For instance, the US share of hashrate skyrocketed to 16.8% from just over 4%. On the other hand, Kazakhstan, Russia, and Iran are also getting a share of the Bitcoin mining cake.

BTC is moving to strong hands, given that its supply shock is standing at levels around the $50-$60K range. The leading cryptocurrency remains to be observed whether a rebound in the hashrate continues a positive trend.

Bitcoin’s Hashrate Edges Closer to the 30-Day Moving Average, Suggesting a Bullish Crossover

Bitcoin miners seem to be on the right footing as the hashrate is on an upward trajectory after nosediving by more than 50%.

Crypto analytic firm Dilution-proof explained:

“The Bitcoin hashrate has recovered enough that its 30-day moving average (Green) is close to a bullish crossover of its 60-day moving average (Blue), which precedes a buy signal on the Hash Ribbon indicator (when the dark red area ends).”

Crypto mining continues to be unwelcome on Chinese soil

A drop in BTC’s hashrate was prompted by an intensified crypto mining crackdown by Chinese authorities that started in May.

Therefore, Bitcoin mining continues to be unwelcome on Chinese soil, given that Anhui became the latest province to shut down all crypto mining activities mid last month, citing an acute power shortage.

In June, Chinese authorities disconnected BTC mining sites in Sichuan. As a result, more than 90% of China’s crypto mining capacity was hampered.

Crypto data provider CoinMetrics recently disclosed that China’s sudden crackdown on mining in Q2 2021 left miners with no choice but to shut down operations and move elsewhere. As a result, Bitcoin’s hashrate fell by more than 50%, but it appears to be rebounding.

The upward trajectory in BTC’s hashrate is caused by a shift from the East to the West, while the United States. is emerging as the biggest beneficiary. For instance, the US share of hashrate skyrocketed to 16.8% from just over 4%.

The bearish and neutral ratios between longs and shorts

According to crypto data provider Santiment:

“The ratio between longs vs. shorts continues to fluctuate between bearish and neutral since Bitcoin’s drop in May. The good news about Bitmex’s contract funding rate continuing to be negative, is that there is less downside risk for BTC’s price.”

With Bitcoin’s hashrate recovering, whether this will prompt an upswing in price remains to be seen as downside risk continues to drop.

Bitcoin Hashrate Resumes More Than Doubles Amid BTC Being up by More Than 441% since the Halving

Bitcoin’s hashrate has been on the right footing because it has more than doubled, as disclosed by research analyst Nick Mancini.

In July, the hashrate plummeted by 50% amid intensified crypto mining crackdowns by Chinese authorities.

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

In June, Chinese authorities disconnected BTC mining sites in Sichuan. As a result, more than 90% of China’s crypto mining capacity was hampered. As a result, this clampdown left miners with no choice but to shut down operations and move elsewhere.

Nevertheless, the upward trajectory in BTC’s hashrate has been caused by a shift from the East to the West, with the United States being the largest beneficiary.

Bitcoin records exemplary performance since the halving

According to on-chain data provider Ecoinometrics, Bitcoin has been up by more than 441% since the halving event of last year. Consequently, the S&P Index and gold have increased by at least 53.1% and 5.53%, respectively, under the same period.

Bitcoin halving refers to the reduction of Bitcoin block rewards, which occurs once every 210,000 blocks are created, and it usually happens around every four years. Block reward refers to the amount of Bitcoin received by miners after they successfully validate a new block. The rationale behind this is Bitcoin’s design, whose total supply is capped at 21 million coins.

Bitcoin’s third halving took place on May 11, 2020, effectively reducing the block rewards from 12.5 to 6.25 BTC per new block. The decay was the third time in its history that this event happened, as the previous ones occurred in 2012 and 2016. Precisely, Bitcoin’s block rewards went down to 25 from 50 Bitcoin per block in November 2012. It further decreased to 12.5 units in July 2016.

The logic behind halving events is that more BTC gets mined as more people utilize the Bitcoin network. Therefore, by slashing the mining rewards by half, retrieving this digital asset becomes difficult, increasing its value based on limited supply.

Ex-IMF Top Economist Shortlisted to Lead Roxe's CBDC Pursuit

Roxe Payment Network, a global payment service provider, has tapped the services of Andreas Jobst to lead its Central Bank Digital Currency (CBDC) initiative.

According to the announcement, Jobst will serve as Roxe’s Chief currency economist, bringing his broad experience as a former expert with the Internal Monetary Fund, the World Bank, and the Bermuda Monetary Authority.

Jobst’s role will involve charting innovative programs to bolster the onboarding of countries willing to tap into the firm’s infrastructure. Roxe has built a CBDC development platform that harnesses the features of the Bitcoin hashrate, providing an added layer of security when compared to the existing options being pursued by central banks around the world.

The Roxe CBDC solution is notably targeted at countries with hyperinflation and looking to build either a primary or a secondary digital currency. Additionally, the company’s offering can also assist economies whose monetary system has been dollarized. This set of countries are notably subservient to the economic and financial policies that emanate from the American Federal Reserve Bank.

Building a functional CBDC through Roxe will entirely be dependent on the Bitcoin hashrate or computing power, and monetary policies will no longer be arbitrary. Many nations today are exploring the development of CBDCs. While the Central Bank of the Bahamas made history the first ever to launch a functional CBDC dubbed the Sand Dollar, other advanced economies, particularly the United States and the United Kingdom, are beginning to focus on this financial innovation.

China is also on track to launch its Digital Renminbi, a project in its advanced trial stages. As part of the Asian giant’s approach to testing the capabilities of the new legal tender, foreign athletes are bound to utilise it in one form or the other at the 2022 Beijing Winter Olympics.