China’s Bitcoin Mining Plunges: Is Its Crypto Industry Dead?
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According to a recent study by the Cambridge Centre for Alternative Finance, China’s bitcoin mining power plunged 75.65% between September 2019 and April 2021, when it accounted for less than half of the global.
Bitcoin Mining Market Shuffles
While Chinese mining power has felt the clamp of authorities since June, CNBC reports that Kazakhstan is climbing fast as its share of global bitcoin mining grew nearly six times in the same period, from 1.4% to 8.2%.
This makes the country the third-largest player in the global bitcoin industry.
In April, “China accounted for less than half (46%) of the power used for bitcoin mining,” while the U.S. soared to second place with a 4.1% to 16.8% increase. Russia and Iran took fourth and fifth respectively.
Since the price of bitcoin has increased in the last couple of years, flocks of people are jumping on the crypto-mining bandwagon, hence boosting the formation of an entire industry. “Most are focused on manufacturing and selling crypto mining equipment.”
However, the more people start mining, the more energy is consumed through computing equipment, drawing concerns about the impact of this activity on the environment.
By being the world’s bitcoin mining superpower and a heavy coal power consumer, China
has been forced to crack down on cryptocurrency mining in recent months, in regions such as Sichuan, Xinjiang, and Inner Mongolia.
Decomposing the “Energy Mix”
As Chinese authorities clamp down on bitcoin mining arguing high coal power use, Cambridge researcher Michel Rauchs asserts that bitcoin’s energy mix is difficult to determine.
“In the rainy season, Chinese miners would often flock to Sichuan, a hydropower-rich province in the southwest.”
His data depicts how Sichuan’s share of total bitcoin mining power soared from 14.9% to 61.1%, as the wet season gradually reached its peak. At the same time, he says, “Xinjiang’s share decreased to 9.6% to from 55.1% over the same period.”
The data could suggest that Kazakhstan’s soaring growth might be partly due to the herd of Chinese miners fleeing their country’s stern crypto policies, even before the actual crackdown was implemented in June.
Bloomberg reports that the former Soviet republic currently boasts more than 22 gigawatts of electric power capacity, “most of which comes from coal and gas stations.”
Yifan He, CEO of Hong Kong-based blockchain company Red Date Technology, goes on to tell Cointelegraph that the cryptocurrency industry in China “has officially disappeared” in its entirety, due to the current prohibitive turn in government policy.