Bitcoin (BTC) mining is back in full force in China. Despite the ban enacted by Beijing last year, the country concentrates more than 21% of the global network hashrate, behind the United States (37.84%) and ahead of Kazakhstan (13.22%). Apparently, an underground industry continues to mine Bitcoin on Chinese soil, hiding from the authorities.
Bitcoin (BTC) mining starts again in China with 21% of the world’s hashrate
The University of Cambridge has released a new report on Bitcoin (BTC) mining worldwide. This new data covers the period from September 2021 to January 2022. During this time, China has once again emerged as a “major hub” for the mining industry.
According to the data, the Chinese territory concentrates 21.11% of the hashrate, the computing power of the Bitcoin network (BTC). Yet the Chinese government formally banned Bitcoin mining in May 2021, citing environmental concerns.
Subsequently, the authorities went after recalcitrant miners by cutting off the electricity supply in some provinces, including the Sichuan Valley. 90% of the country’s farms came to a standstill during the summer. For a while, the University of Cambridge did not detect any miners in China.
U.S. consolidates its position as a leader in mining
Despite the ban, China is now the 2nd most hashrate-rich country in the world. In first place is, unsurprisingly, the United States (37.84%). As a result of the restrictions in China, many miners have migrated their facilities to U.S. soil, including Texas (11.22%), Georgia (30.76%) and Kentucky (10.93%). The report notes that “the United States has not only maintained its leadership position…but has also outpaced the rest of the world in hash rate growth.”
In 3rd place was Kazakhstan (13.22%) followed by Canada (6.48%) and Russia (4.66%). Before the bans issued by Pekin, China accounted for 44% of the computing power of the Bitcoin network. In 2019, the hashrate relying on Chinese farms had even reached a record high of 75% before stabilizing around 55%.
A clandestine mining industry operates in China
Cambridge University researchers attribute the resurgence of miners in China to “an underground industry”. According to the report, it is likely that mining farms have continued to operate on Chinese territory with precautions. The British researchers explain:
“Access to off-grid power sources and a geographic spread of small-scale operators are among the main ways to circumvent the ban.”
To protect themselves from authorities, miners likely relied on “virtual private networks (VPNs) or other proxy services.” These tools allowed them to hide their location. That’s why countries like Germany or Ireland, which are home to many VPN servers, have started to climb in the results of the Cambridge Bitcoin Electricity Consumption Index (CBECI).
Launched in 2019, this index has quickly established itself as one of the industry’s benchmarks. To provide an estimate of the Bitcoin network’s energy consumption in real time, the researchers rely on location data provided by several pools, among other things. The researchers assume that the IP address of a mining farm is a reliable indicator and that the sample of pools is representative of the entire industry.
If many cryptocurrency miners start hiding their location, the relevance of the index may be called into question. Indeed, the researchers attribute the “brutality of the resurgence” of farms in China to “methodological trade-offs.” In practical terms, not all mining infrastructure had actually left Chinese territory as a result of the restrictions. De facto, at least a part of the miners in China is not listed by the index, because it is possible to hide its IP address. It is therefore possible that more farms are still operating on Chinese soil.
