The Bitcoin hash rate is on a steady incline as miners fleeing from China turn their rigs back on. Since the June low around 84 exahashes per second (EH/s), the hash rate has ticked 50% higher, reinforcing the fact that Bitcoin is ultimately agnostic of hostile country regimes.
The crackdown on bitcoin mining in China has directly caused a radical redistribution of the global bitcoin hash rate, favourably decentralising the network outside the regime. Following the restriction on bitcoin mining amidst a fact-free political commitment to to a new energy regime that aims to see China “carbon neutral” by 2060, bitcoin mining operations have been shuttered by Chinese provinces, including Qinghai, Xinjian, and Iner Mongolia. The crackdown has spurred discussions about the so-called ‘great mining migration’.
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China has consistently been the dominant player in cryptocurrency markets. In August 2019, Chinese miners contributed over 75% of the global bitcoin hash rate; a figure which fell to 46% in March 2021. In what analysts are calling an “exodus,” miners are moving their operations to bitcoin-friendly regions.
The migration has caused a hash rate shift, the most dramatic increases occuring in the United States, Kazakhstan, Iran, Canada and Germany, respectively.
One positive impact from the change in direction is that more operations are opening in the West, a market that once contributed only a fraction of the hash rate. Mining operations in the US have seen their share of hashing power increase from 4% to 17% since August 2019. The crackdown has opened up potentially lucrative opportunities to vie for a slice of the pie. Operations in Canada and Germany have also seen an uptick, making these the 7th and 8th biggest contributors, respectively.
Iran is the fifth biggest contributor, but the country has made moves to control the use of cryptocurrencies, banning mining for 4 months and seizing over 7,000 mining machines in June amidst the ban.
amidst the reshuffling, however, Kazakhstan has emerged as the third-largest contributor to the global hash rate contributor. The Cambridge Bitcoin Electricity Index ranked Kazakhstan’s average monthly hash rate share at 8.19%, a number that is sure to increase after BIT Mining announced it plans to deploy 2,500 Bitcoin miners in the Central Asian country. Recently, Shanghai-based The9 has announced plans to build a crypto mining site in Kazakhstan with a promised capacity of 100 megawatts. Currently, cryptocurrency is treated as property in Kazakhstan rather than a form of currency.
Ultimately, the Chinese crackdown has a major rippling effect on the network’s geography, but bitcoin remains resilient as ever precisely due to its decentralisation.
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