Even after last year’s Bitcoin mining ban, China is still second only to the United States in terms of capacity.
According to data from the Cambridge Digital Assets Programme, China has reemerged as a major Bitcoin mining hub, with covert miners accounting for more than one-fifth of the network’s hash rate (CDAP).
The Cambridge Centre for Alternative Finance (CCAF), recognized for its widely cited Bitcoin Mining Map, hosts the CDAP, a public-private research program.
In June 2021, the Chinese government placed a blanket ban on Bitcoin mining. It was the latest move by authorities there to suppress mining activities following years of conflict with the business. China-based Bitcoin miners accounted approximately 67 percent of the network activity in September 2020.
Last May and June, authorities began cracking down on Bitcoin miners, and the network hashrate dropped, reaching 57 exahashes per second (EH/s) at one point. However, as miners migrated, it rebounded to pre-ban levels by December and achieved an all-time high of 248.11 EH/s in February.
Hashrate is a measure of a blockchain’s total computing power. Each hash is a “best guess” at a cryptographic string. The correct answer earns the opportunity to validate a block’s worth of transactions and add them to the blockchain. One exahash is equivalent to one quintillion such guesses.
According to the report, a large fraction of Chinese Bitcoin miners adapted to the prohibition by using overseas proxy services to mask mining activities rather than leaving the country. According to new CCAF data, China now accounts for 21 percent of Bitcoin hashrate, trailing only the United States, which now accounts for 38 percent.
“As the ban has set in and time has passed, it appears that underground miners have grown more confident and seem content with the protection offered by local proxy services,” CDAP’s report says.
Even before China’s ban went into effect last year, Bitcoin miners in the United States were exceeding overall network growth. According to CDAP, the United States increased its share of the Bitcoin network hashrate from 11% to 22% in the first half of 2021.
In January, installed Bitcoin mining capacity in the United States reached 70.97 EH/s, a 66 percent increase from August. The increase in the states has been so considerable that CCAF has added a map of Bitcoin mining in the United States to its index. It reveals that Georgia (31%), Texas (11%), and Kentucky (11%) account for more than half of the country’s overall hashrate.
CDAP also said that it is developing a methodology to quantify the Bitcoin network’s greenhouse gas emissions after discovering that last year’s prohibition in China appears to have exacerbated mining’s environmental impact.