Bitcoin miners flocked to US ahead of Chinese crypto crackdown - THE TELEGRAPH UK
Bitcoin miners have been flocking to the US and Kazakhstan as China's government prepared to crack down on the currency, new data shows.
America's share of worldwide Bitcoin mining rose from 4.1pc in September 2019 to 16.8pc at the start of April, putting it second in the world, according to figures from the Cambridge Centre for Alternative Finance (CCAF).
Kazakhstan's share also surged sixfold from 1.4pc to 8.2pc, taking third place, while China's plummeted from 75pc to just 46pc. Russia came fourth with 6.8pc, while Iran was fifth with 4.6pc.
That was before the Chinese government announced a nationwide wide ban on cryptocurrency payments in May, beginning a sweeping crackdown that sent Bitcoin prices tumbling and caused an exodus of miners.
Michel Rauchs, head of digital assets research at CCAF, said the raw amount of mining power in China had remained stable until April, but that new mining operations appeared to have avoided the country amid gathering signs of political turbulence and future energy price hikes.
He said China's relative share of the Bitcoin hashrate, meaning the total amount of computing power devoted to its network, had fallen even as the total hashrate doubled, indicating it had become "massively" less attractive to miners.
Mr Rauchs said: "I personally expect pretty much 99.9pc of China's remaining hashrate to soon be completely gone... you can say with some confidence that there is no mining in China left, unless it's done covertly."
Bitcoin mining is the process of creating new digital coins, and verifying the movement of existing ones, by using powerful computers to solve mathematical puzzles.
Compared to traditional currencies it is highly energy intensive, leading many to regard Bitcoin as environmentally unsafe. CCAF estimates that the Bitcoin network uses more electricity per year than the nation of Austria.
Officials had been slowly tightening the screws long before May, with miners' bank accounts frozen by money laundering investigations and the province of Inner Mongolia vowing to ban mining entirely in March.
Meanwhile, US states such as Texas and Wyoming have sought to attract exiled Bitcoin miners, promising favourable regulation and easy access to cheap sources of energy.
Mr Rauchs said that China's inconsistent but frequent past actions against cryptocurrency had probably contributed to the drop, along with the building of new power lines from remote energy sources to major cities that would diminish the amount of "stranded" or excess energy available.
He added that mining outfits are still struggling to find enough power overseas, meaning that some of the lost hashrate may never be restored.
The new data also reveals the scale of seasonal migration in Chinese Bitcoin mining. Past reports have indiated that miners often base their computers in Sichuan during the rainy season, when hydroelectric power is almost free, before decamping to the arid province of Xinjiang to exploit cheap coal power during the dry season.
CCAF's figures back that up, showing Sichuan's share of Chinese mining reaching a peak of 61.1pc in September 2020 and dropping as low as 8.6pc this January, while Xinjiang's rose from 9.6pc in September to 59pc in January.
However, both provinces have now banned Bitcoin mining, citing a need to reduce energy consumption, while China's central government is pushing its own digital version of the yuan.
CCAF's data was drawn from four Bitcoin mining groups representing around 37pc of the total global hashrate.