Did you know that over an estimated 50% of all Bitcoin mining takes place in China? Well, it used to until China’s latest crypto-crackdown.
The Chinese government announced a country-wide restriction on Bitcoin mining–a move they’ve been hinting at for some time, and one that has finally taken effect in regions with heavy mining activity. This time, the miners are leaving for good.
Current statistics indicate that China has successfully forced a shutdown on at least 90% of the nation’s mining activity thus far, causing the hashrate to plummet this week from its record 180.7 million to 116.2 million terahashes per second. (CNBC)
Keep in mind that since the hashrate is currently lower, Bitcoin miners powering the network are operating more profitably until this migration goes into full effect.
In May, Tesla CEO, Elon Musk, was very vocal about concerns regarding Bitcoin mining being powered by coal, most of which was taking place in China. This was “supposedly” the reasoning behind Tesla putting a pause on accepting Bitcoin as payment for its electric vehicles.
China has stated that the clampdown was due in part to their own sustainable energy initiatives, emphasizing that they have not been able to hit their renewable energy targets because of crypto mining. There are further suspicions that China is ramping up its efforts in anticipation of the full deployment of the digital Yuan, their government’s central bank digital currency. The digital Yuan will be tied to and run by their central bank, taking the decentralized core of crypto out of the picture.
Unfortunately, China isn’t the only country implementing these restrictive measures. The Iranian government reportedly confiscated about 7,000 cryptocurrency mining machines, one of several instances in which Iranian authorities have taken action against illegal mining in the country. (Cryptopotato)
Iran saw an influx of Bitcoin miners because of its cheap electricity but quickly implemented a four-month moratorium once they began to experience power blackouts. It’s estimated that around 85% of the Bitcoin mining in Iran is unlicensed, but the country accounts for only up to 4% of the global mining activity. (Reuters)
While these latest developments may seem concerning at first, there is a monumental silver lining. Since 2013, news stories have surfaced time and again regarding China’s stance on Bitcoin and crypto, often adversely affecting market conditions. With miners leaving China, this reduces the potential negative impact of these stories in the future. It also creates a massive opportunity for Bitcoin mining to become more decentralized and distributed throughout the globe.
With this latest shift, where are miners looking to set up shop next? Let’s take a look.
Kazakhstan, neighboring China, is now on the mining map. Bit Mining and Canaan, both major suppliers of Bitcoin mining hardware in China, have started allocating resources to Kazakhstan in anticipation of it being a major player in the Bitcoin mining game. (CoinTelegraph)
Bitcoin miners are also exploring migrating to U.S. top geo-locations including Florida and Texas. “It’s essential that the United States continue to be a global leader in these emerging technologies to ensure that our democratic values remain at the forefront of this technological development,” stated Representative Darren Soto of Florida. (YahooFinance)
Texas has some of the world’s lowest energy prices and a deregulated power grid that promotes a free power economy. Over 20% of Texas’s power also comes from wind and is known for its massive solar-energy farms. It’s very likely we will see the U.S. rise to become a leading Bitcoin mining epicenter. (CNBC)
We also know El Salvador, after announcing Bitcoin as legal tender, plans to expand its Bitcoin mining operations powered by geothermal energy from volcanoes. It’s expected that a flood of South American countries could join the Bitcoin mining revolution, as well.
Paraguay, emulating El Salvador, is working on a proposal to make Bitcoin legal tender and welcome the mining operations from China looking for a new destination. “Paraguay is home to the Itaipu Hydroelectric Dam (IHD), which is located on the border with Brazil. The IHD is the world’s second-biggest hydroelectric dam, with an output of 14 gigawatts. It supplies Paraguay with 90% of its electricity and 15% of Brazil’s needs.” (CryptoSlate)
What we’re actively seeing is the narrative around Bitcoin’s energy consumption evolving before our very eyes. From being considered a wasteful use of precious resources, to being an essential financial incentive to power the sustainable energy emergence we so desperately need.
Bitcoin mining will help reduce the waste of energy production from methane and help better economically utilize hydroelectric power, which is generated too far away from major energy grids to be utilized. China has actually helped accelerate this process from this initiative, acting as a forced multiplier of necessary progress while giving economies around the globe the opportunity to benefit from Bitcoin.
As the miners migrate, the network will become more secure, less centralized, and more distributed. The next generation of the crypto mining gold rush has begun.
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