The United States has just established itself as the main Bitcoin miner in the world. After the measures taken by China in May, mining farms have migrated massively to American soil. The country now concentrates more than 30% of the power of the Bitcoin network, far ahead of the People’s Republic of China.
Until recently, the bulk of Bitcoin mining farms were concentrated in China. According to data from several studies carried out by Coinshare, more than 60% of mining farms were established on Chinese territory. China was also home to many entities grouping miners, called mining pools.
Despite the hostility of the Chinese government, China was an ideal haven for installing mining infrastructure. Indeed, many regions of the country, such as the Sichuan valley, have important sources of renewable energy like hydroelectric dams. These dams established on the Yangtze, the longest river in Asia, allowed miners to produce cryptocurrency at a reduced cost by exploiting surplus energy.
China pushed Bitcoin miners to exit
Unfortunately, Beijing has gradually started to drive out Bitcoin miners outside its territory. On the pretext of ecological concerns, Xi Jinping’s government carried out careful inspections of mining farms on its soil as early as 2019. Last May, the Communist Party finally carried out its threats by excluding miners from China province by province. China has notably asked electricity suppliers to cut power to companies suspected of mining cryptocurrency in the Sichuan region.
Unsurprisingly, the restrictions put in place by the Chinese authorities are not really linked to ecology. Beijing fears instead that the queen of cryptocurrencies represents a strong competitor for its digital yuan. Mirroring several countries, China has developed its own central bank digital currency. To push its adoption among the population, the nation has forced many merchants to accept the digital yuan as a means of payment.
Bitcoin miners have massively settled in the United States
Excluded from China, Bitcoin miners quickly got back on their feet. Many mining farms have found refuge in countries like Iran, Kazakhstan or Russia. These countries offer advantageous tariffs on electricity, which is an advantage for cryptocurrency mining. Others are looking to Canada, where many hydroelectric dams are available. A multitude of infrastructures have also been established in the United States.
According to data published by researchers at the University of Cambridge, a significant portion of the Bitcoin hashrate power now comes from the United States. 35.4% of hashrate now depends on farms located on American soil, up 428% compared to September 2020. This is the first time that the USA have won number 1 in this field.
“Lhe United States concentrates 35.4% of the mining activity, against 16.8% at the end of April ”, states Michel Rauchs, author of the study. “This is roughly China’s share before the government measures, which suggests that the miners have indeed ceased operations, all at the same time ”, considers the expert. In second place behind the United States, we now find Kazakhstan (18.1%), followed by Russia (11%). In Kazakhstan, electricity is cheaper and the restrictions are much less severe.
In the space of a few months, the power of the network which depends on Chinese farms has dropped from 44% to 0%. By 2019, China’s dependent hashrate had reached an all-time high of 75%, says the University of Cambridge. This rate then stabilized at around 55% by 2020. In the space of a few months, the miners fell. massively diverted from China to settle on the other side of the Atlantic.
Many minors have notably settled in the state of Texas. This southern state is distinguished by low cost electricity and a growing attraction for renewable energies. What’s more, many Texas political leaders have recently come out openly in favor of the cryptocurrency industry.
This is the case of Ted Cruz. The Republican senator has officially invited miners to mine Bitcoin using natural gas burned in Texas. “Use this power to produce Bitcoin. Part of the beauty of it all is that from the moment you do it, you help the environment enormously because instead of burning natural gas, you use it productively ”, launched Ted Cruz at a conference dedicated to the queen of cryptocurrencies.
Source: University of Cambridge