China’s Bitcoin Mining boom continues despite ban

After China banned the use of cryptocurrencies in 2021, there was a huge exodus of miners to the United States, Kazakhstan, and other destinations. The Cambridge Centre for Alternative Finance shows that Chinese miners did not disappear - many still operate, albeit covertly, according to new data from the Cambridge Centre for Alternative Finance CCAF.

Today, China has emerged as the world's second largest hub forBitcoin mining. Although China had zero percent of the total hash rate last July - two months after the ban on mining went into effect - the industry quickly roared back to life September 2021 to January 2022, when China constituted about 20% of the total hash rate, referring to the computational power per second the Bitcoin network has produced in the last 24 hours.

By September 2021, China had 22.3% of the hash rate, while the U.S. took the top spot at 27.7%.

According to the CCAF study, this rapid recovery of China's mining sector indicates that significant underground mining activity has formed in China. Access to off-grid electricity and geographically scattered small-scale operations is one of the main means used by underground miners to hide their operations from authorities and circumvent the ban. It takes time to find existing or build new non-traceable hosting facilities at that scale, CCAF said. It is possible that a non-trivial share of Chinese miners quickly adapted to the new circumstances and continued operating covertly while hiding their tracks using foreign proxy services to deflect attention and scrutiny. It appears that underground miners seem to be content with the protection provided by local proxy services, as the ban has been set in and time has passed.

While China has regained its dominance in globalBitcoin mining, others have fallen in place. Political turbulence and economic unrest in Kazakhstan made its global hashrate drop to 13.22% this year.

The United States has the greatest growth in its hashrate, and has strengthened its position as the top miner. More than half of the mining in the U.S. is concentrated in just three states: Kentucky 10.93%, Texas 11.22% and Georgia 30.76%. America's installed capacity increased from 42.74 EH s last August to 70.97 EH s earlier this January.

The U.S. has consolidated its dominant position by a wide margin, while other countries are only moderately growing their capacity, according to the study.