China outlawed Bitcoin mining last May. Exactly a year later, the country has re-emerged as the leading venue for mining operations.
Underground mining activity in the country has catapulted it to second place in the world in terms of installed mining capacity, a new study has revealed.
China’s Apparent Comeback
Cambridge Centre for Alternative Finance (CCAF) reported the surprising resurgence and further stated that China currently dominates with a 21.11% market share just behind the US with 27.69%. On the other hand, countries that were earlier perceived as stronger Bitcoin mining hubs, such as Kazakhstan, Canada, and Russia, are trailing far behind with 13.22%, 6.48%, and 4.66%, respectively.
The reported mining hash rate for the entire country effectively fell to zero during the months of July and August, according to the Cambridge Bitcoin Electricity Consumption Index (CBECI).
In the following month, the reported hash rate suddenly climbed back to 30.47 EH/s. According to the study, this trend demonstrated that significant underground mining activity has transpired in the country, which “confirms what industry insiders have long been assuming. ”
The CCAF said,
“Access to off-grid electricity and geographically dispersed small-scale operations are among the main ways underground miners use to hide their operations from authorities and circumvent the ban.”
The swift recovery in China’s mining activity can be attributed to miners concealing their location by leveraging virtual private networks (VPN) or other proxy services. The study also argued that as time passed, Chinese underground miners have become more confident with the protection offered by local proxy services to cover their tracks.
Change in the Bitcoin mining landscape
The global bitcoin mining landscape has changed dramatically after China’s ban. The United States, for its part, continued to assert itself as the leader by a wide margin. However, other countries, with the exception of Canada, which has seen only moderate growth, have not yet proven to be favorable destinations for miners.
Russia suffered a considerable drop in relative hash rate share from 11.23% in August 2021 to 4.66% in January 2022. During the same period, the country also saw a substantial decline in terms of total installed mining capacity contribution from 13.56 EH/s to 8.74 EH/s.
Kazakhstan, once seen as an attractive country for Chinese Bitcoin miners, saw its market share drop by 13.22%, in part due to power shortages and political pressure. His government previously imposed stricter rules on mining companies and also increased the tax burden on miners.
