China Bitcoin mining pools now command over 50% of the total hash rate based on on-chain data. This is despite the 2021 China crypto ban. Bitcoin is a global network powered by willing node operators, enabling the seamless transfer of capital.
Initially, Bitcoin was meant to be e-money, an alternative to fiat. However, over the years, BTC has become a medium of exchange (especially in developing economies) and a store of value, more like gold.
The problem is that the very solution that Bitcoin advances is rubbing some governments the wrong way.
Therefore, some have chosen to ban BTC trading and even mining. Take China for example.
In Bitcoin’s formative stages, investors from China were the first to spot opportunities, creating a vibrant community with big businesses, including miners.
Fast-forward to 2017 and 2021, mainland China’s Bitcoin mining and trading scene has been muted amid strain on the Chinese national grid and the launch of the Digital Yuan CBDC.
The good news is that all is not lost, at least if dependable on-chain data is anything to go by.
Bitcoin Mining Pools In China Are Still In Operation
According to Kim Young Ju, the founder of CryptoQuant, Chinese mining pools control a staggering 54% market share in hash rate–a measure of computing power dedicated to the network.
(Source)
This is surprising because when China banned Bitcoin mining in 2021. Then, they cited environmental concerns, forcing Chinese miners to operate elsewhere.
Though many miners sought refuge elsewhere, this statistic suggests that mining is, after all, thriving.
One explanation is that some miners might be operating covertly within China. It is potentially with the knowledge of authorities who are concealing data.
Another possibility is that not all participants in these pools are necessarily located in China.
While the possibility of the first being true is high, this points to the complex relationship the second largest economic powerhouse has with crypto: It is complex, but they still don’t want to miss out on opportunities the industry presents.
Their decision to purge crypto mining has inadvertently driven business to the United States, boosting their tax revenue. Though regulations are being developed, they are supportive, and politicians like Donald Trump endorse these operations.
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Banning Mining Was Unwise, Says VP On HKUSDT
Recently, Wang Yang, the Vice President of the Hong Kong University of Science and Technology (HKUST), criticized the Chinese leadership for their blanket ban on crypto mining.
He argues that the policy was “unwise” and resulted in a missed opportunity for China. This is so especially as they advance the “Belt and Road” initiative.
Instead of completely banning crypto mining, they could have allowed state-owned enterprises to participate or even hold shares in mining firms to manage risks.
For how things stand today, the Vice President thinks that if Donald Trump becomes president, China might have to reevaluate its decision.
Events in the United States, especially Texas, show that Bitcoin mining can efficiently be used to manage grids and mop excess capacity.
Recent reports show that China is not releasing data on power usage rates by generation source in a timely manner. It comes amid growing concerns about excess capacity in its renewable energy grids. With miners in play, these grids wouldn’t have had a problem with excess capacity.
Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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