Since China banned Bitcoin mining in May 2021, the country has experienced a dramatic shift in its relationship with cryptocurrency mining. China’s reasoning for banning mining was concerned about financial risk, energy consumption, and environmental impact.
At the time, the 2021 ban resulted in a mass exodus of mining operations within China. Many Bitcoin miners, who once made up around 65-75% of the global hash rate, shut down operations completely or relocated to more crypto-friendly regions like the United States, Kazakhstan, and Russia.
There was a brief period in the immediate aftermath that saw Bitcoin’s global hash rate drop sharply, which caused network difficulties. This was quickly resolved as miners began to set up their overseas operations.
Chinese Bitcoin Miners Response To The Ban
China hasn’t completely disappeared as a hub for Bitcoin Mining. Since the ban, an underground mining network quickly took hold. Some Bitcoin miners persisted in China post-ban, often in rural areas where it’s easier to run operations covertly. These miners rely on VPNs and decentralized networks and use small-scale operations to avoid detection.
Chinese authorities continue to crack down on illegal mining activities. In several provinces, authorities have seized equipment and electricity to curtail these activities. Outside of illicit mining operations, China have also pivoted into the R&D and infrastructure side of things.
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Ada Qing from Goldtime Mining spoke on the firm’s business changes following the 2021 ban, which has seen it shift to overseas sales – now across more than 80 countries.
In comments to 99Bitcoins, Qing said “Following the ban, we swiftly adapted by expanding our focus to overseas markets. Currently, we have strong partnerships in mining-friendly regions such as North America, Europe, and the Middle East, assisting clients with the rapid deployment of our hardware. Additionally, we’ve invested heavily in R&D to create energy-efficient, globally compliant products that cater to changing market demands.”
She went on to discuss Goldtimes’ production of new and environmentally friendly miners, saying, “Our latest product, the Bitmain Antminer AL1, is engineered to meet both high computational power needs and energy efficiency, which is crucial for regions with high energy costs. This capability has allowed us to maintain a competitive edge in the global mining market while offering robust and reliable solutions to miners worldwide.”
The New Bitcoin Mining Hubs Picking Up What China Was Putting Down
Following China’s ban, the US moved quickly to become a key destination for Bitcoin Miners. States such as Texas became a hub for many large-scale mining operations. This was largely due to energy being cheaper and the regulatory environment being favourable for mining firms.
Kazakhstan and Russia also attracted many displaced Chinese miners, though Kazakhstan has since imposed regulatory measures and energy constraints, limiting a fair amount of mining activity.
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(Bitcoin Mining In China Before The Ban. SOURCE: X)
US Is The New Top Dog For Bitcoin Mining
As of late 2023, the largest mining pool in the world, Foundry, is based in the United States. Another huge milestone for the legitimacy of Bitcoin mining as a business is that several firms are now trading their shares on public markets.
One of these, Riot, has an explicit mandate to bring more large-scale Bitcoin mining to the United States. While many of the old China-based mining pools are still active, they no longer hold the dominant share of the hash rate they once did.
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China’s Current Stance: Are They About To Lift Ban On Crypto And Spearhead This Coming Bull Run?
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– The People's Bank of China laid out plans for stimulus and rate cut. This made Chinese stock market jump over 8% first day and the third day after the announcement.
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Currently, China has an anti-crypto, pro-blockchain agenda. It maintains its ban on crypto and crypto mining. However, the government continues to explore blockchain technology and is pushing forward with its own digital currency, the Digital Yuan (e-CNY).
This is part of its central bank digital currency (CBDC) initiative.
Over the last few months, there have been many rumours that China is close to lifting its crypto ban. These rumours have been further fuelled by China’s recent announcement of a $142 billion cash injection into its financial markets.
In addition, many prominent figures in China have been vocal about its need to embrace crypto. In the past few days, Zhu Guangyao, the former finance minister of China, gave a speech at Tsinghua University. He’s calling for China to dive deeper into crypto and make it a major player in the digital economy.
NEW: 🇨🇳China's former finance minister, Zhu Guangyao, says crypto is a crucial part of the digital economy.
He urges Beijing to focus more on the crypto markets and their role in the future. pic.twitter.com/MxPIOc1EOo
— Kashif Raza (@simplykashif) September 30, 2024
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.
