The United States has overtaken China to account for the majority of the world’s bitcoin mining, according to data published by researchers at the University of Cambridge.
The figures demonstrate the impact of a crackdown on bitcoin trading and mining launched by the Chinese government in late May, which devastated the industry and caused miners to shut down their businesses or move abroad.
China’s share of the power of computers connected to the global bitcoin network, known as the “hash rate,” fell from 44% in May to zero in July, according to data from Cambridge Center for Alternative Finance presented. China’s share reached 75% in 2019.
Miners elsewhere have taken over, with mining rig manufacturers shifting their attention to North America and Central Asia, and larger Chinese miners are moving as well, though this process is fraught with logistical difficulties.
As a result, the United States now accounts for the largest share of mining, 35.4% of the global hash rate at the end of August, followed by Kazakhstan and Russia, the data showed.
Bitcoin is created or “mined” by high-powered computers, usually in data centers in different parts of the world, competing to solve complex mathematical puzzles in an electricity-intensive process.
The industry’s expansion in the US and its heavy use of electricity could therefore present an uncomfortable question for President Joe Biden ahead of the Cop26 climate talks in Glasgow next month.
Russia’s low energy costs and cool weather allowed some companies using surplus electricity to benefit from soaring bitcoin prices earlier this year, but concerns about illegal mining are mounting.
In a letter to the Moscow government in late September, Igor Kobzev, governor of Russia’s Irkutsk region, noted “avalanche-like growth” in energy tariffs, blaming underground cryptocurrency mining.
“(The situation) is further resolved with the ban on mining imposed by the Chinese authorities and the relocation of a significant amount of equipment to the Irkutsk region,” Kobzev said in the letter, according to a report in the Vedomosti newspaper on Wednesday. . .
Authorities elsewhere are more tolerant or even welcoming of bitcoin mining, while Chinese authorities announced even strict rules for bitcoin mining and trading last month.
“Our current focus is to accelerate the construction of compliant mining farms in North America and Europe,” a representative for mining rig maker Ebang International Holdings told Reuters after the latest crackdown.
But industry players remain bruised.
“As a veteran who witnessed the birth of the industry in China, I feel the current situation is regrettable,” said Mao Shihang, founder of F2Pool, once the world’s largest bitcoin mining pool, and co-founder of Cobo, a Singapore-run cryptoasset. manager and custodian.
“China is losing its share of computing power … the industry’s center of gravity is shifting to the United States,” he said, speaking before the Cambridge data was released.