The United States has taken the leading position in Bitcoin mining following China’s crackdown on mining operations, shows data update from the Bitcoin Electricity Consumption Index (CBECI) at the Cambridge Centre for Alternative Finance.
By Michel Rauchs, Digital Assets Lead at the CCAF
The latest update to the Cambridge Bitcoin Electricity Consumption Index (CBECI) has confirmed the impact of the Bitcoin mining crackdown in China, showing that the leading share of global Bitcoin network hashrate now sits in the US, followed by Kazakhstan and the Russian Federation.
This new data (to the end of August 2021) shows the US with a global hashrate share of 35.4% (up from 16.8% at the end of April), Kazakhstan with 18.1% (up from 8.2%) and the Russian Federation with 11% (up from 6.8%). This confirms the hashrate trajectory identified in the last update (to end April 2021) which showed those three countries were already gaining market share prior to the crackdown in China.
The immediate effect of the government-mandated ban on crypto mining in China was a 38% drop in global network hashrate in June 2021 – which corresponds roughly to China’s share of hashrate before the clampdown, suggesting that Chinese miners ceased operations simultaneously. New data reported by partnering mining pools BTC.com, Poolin, ViaBTC, and Foundry confirms this observation: declared mining operations in mainland China have effectively dropped to zero, from a high of 75.53% of the world’s total Bitcoin mining in September 2019 when this data was first recorded.
That initial 38% drop in global hashrate in June was partially offset by a 20% “bounceback” over July and August, suggesting that some Chinese mining equipment has been successfully redeployed overseas. Further, as of early October, the hashrate trajectory is indicating that all, or nearly all, of that June downturn would be fully recovered soon. If the August data updates are an indication for the future, then that recovery will likely be further distributed predominantly between the largest share gainers – US, Kazakhstan and the Russian Federation.
Outside of the top three, the next largest hashrate shares are Canada (9.55%), Ireland (4.68%), Malaysia (4.59%), Germany (4.48%), Iran (3.11%) and Norway (0.58%), followed by a long tail of countries. The effect of the Chinese crackdown is an increased geographic distribution of hashrate across the world, which can be considered a positive development for network security and the decentralised principles of Bitcoin.
It is worth noting that the shares for Ireland and Germany are likely due to a growing number of miners rerouting through those countries via VPNs or proxy servers, rather than growing mining activity for which there is little or no evidence.
The next update to the CBECI will show whether the recovery in global hashrate has continued on the same trajectory, and where that hashrate continues to be deployed. Aside from regular updates to the mining map, and the recent addition of a cumulative total to the network power demand index, further functional updates to CBECI are in the pipeline and are expected to go live once the methodology and data have been validated.
The research team is working to examine further updates to the tool and underlying datasets, and is actively seeking to add further mining pools to the list of data contributors in order to provide as comprehensive a sample as possible; any interested pools should get in touch via the CBECI website.
The author can be contacted at [email protected]
Note: this project is part of a broader research stream about the climate aspects of digital assets. Other research streams of the CCAF Digital Assets Programme include the configurations and processes of distributed financial market infrastructure (dFMI) – the collection of blockchain networks and related application ecosystems – as well as emergent money systems like stablecoins, central bank digital currencies (CBDCs), and other digital tokens.