China is no longer the leader in the Bitcoin network’s hash rate. Who made it into the top three?
In May this year, the Chinese government issued a new directive banning Bitcoin mining, leading to a huge exodus of miners from the country. It used to retain the lead in terms of hash rate, but this has changed dramatically in recent months, with the PRC’s share of total network processing capacity now nearing zero. Most of the mining centres have found a place in new regions of the world.
As a reminder, before the spring ban on mining in China, the country was indeed a leader in the industry. On average, the state accounted for around 66 per cent of the Bitcoin network’s computing power. That is, we are talking about two-thirds, which has led many investors to fear the possible negative impact on the cryptocurrency blockchain by the country’s citizens.
The negative impact was, however, on the other side. In the spring, the country’s government banned cryptocurrency mining in several provinces in China. This coincided with criticism of the Bitcoin mining niche from Ilon Musk, who did not like the excessive energy consumption of the blockchain. The series of events eventually led to a market crash, which took place on 19 May 2021.
We dealt with the May collapse in detail in a separate article. We recommend reading it to better understand what is happening in the digital asset niche.
Bitcoin’s fall
In the end, however, the situation has benefited Bitcoin. The cryptocurrency survived a critical phase, with the blockchain’s hash rate recovering over time. We checked the latest data: today, the network’s processing power is at 139 hashes per second. In May, it was as high as 191 hashes, before collapsing to a local low of 69 hashes. Accordingly, the hash rate has more than doubled since then.
Bitcoin hashrate graph for the last six months
Meanwhile, the hash rate recovery is already taking place without China’s involvement. Miners are moving equipment to other countries, many of which are far away.
Where is Bitcoin mining most active?
According to the Cambridge Bitcoin Power Consumption Index (CBECI), US miners currently account for up to 35.4 per cent of the cryptocurrency’s network hash rate. Kazakhstan and Russia have become the most popular countries for mining BTC outside of America, with 18 per cent and 11 per cent of the hashrate respectively.
Share of countries in Bitcoin’s hashrate
As you can see from the chart above, official statistics show that the hash rate of miners in China is almost zero. However, the reality is unlikely: for example, Cointelegraph journalists suggest that many Chinese are mining illegally, trying to hide their activities from the authorities. Still, cryptocurrency mining is a lucrative business, which means some may indeed take a risk for the money.
The fact that the US now captures most of Bitcoin’s hash rate has also been triggered by the increased activity of US miners following China’s bans. Taking advantage of the massive equipment shutdowns and falling complexity, they have seriously ramped up the number of their ASIC miners.
Bitcoin network hash rate dynamics over the last 180 days
Note that the Chinese government eventually decided to ban local interaction with digital assets altogether. Popular platforms supported this and have already taken action to comply with the local legal framework. In particular, the day before, Binance announced that it will stop interacting with the RMB on its OTC trading platform. This will occur after December 31, 2021. Representatives of Binance also announced the closure of access to the platform for residents of mainland China, while not disclosing the date of implementation of the changes.
While China actively opposes everything related to crypto, El Salvador, on the other hand, is actively embracing innovation at the national level. The day before, El Salvador’s President Nayib Buquele announced the launch of a mining centre based on a local power plant that runs on volcanic energy.
Nayib Buquele proposed to use the energy of volcanoes to mine bitcoins
The idea caught the attention of the Colombian senator. He suggested that locals could get involved in Bitcoin mining instead of cocaine production. Read more about this idea in a separate article.
We believe Bitcoin has already passed the major test of 2021, and it has done so decently. The cryptocurrency has continued to operate without any pause and miners have simply moved to other countries. This once again confirms the assumption that it will no longer be possible to destroy a decentralised system of this scale.
You can find out even more interesting things about mining and cryptocurrencies in our Millionaire Cryptochat. There we will discuss other trivia affecting the world of decentralisation and blockchain.
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