Bitcoin’s hash rate is on a steady upward trajectory as miners switch their machines back on — outside of China. Since its June low around the 84 exahashes per second (EH/s) mark, the hash rate has grown around 50%.
China’s crackdown on bitcoin mining has contributed to a radical redistribution in the global Bitcoin hash rate. Following the country’s recent implementation of new restrictions on bitcoin mining amid its commitment to a new energy policy that aims to see China “carbon neutral” by 2060, bitcoin mining operations have been shuttered in several Chinese provinces, including Qinghai, Xinjian, and Inner Mongolia; the crackdown on mining in China has raised many questions about the impact of what many call the “Great Mining Migration.”
China has consistently dominated the cryptocurrency markets. In August 2019, miners in China contributed just over 75% of the global Bitcoin hash rate; this has fallen to 46% in March 2021. In what many are calling an “exodus,” miners are shuttering operations in China and moving operations to more Bitcoin-friendly regions.
The hash rate migration has caused a shift in the locations of the top global hash rate contributors. The most dramatic increases in hash rate among the global community have occurred in the United States, Kazakhstan, Iran, Canada, and Germany, respectively.
However, the move by China to crack down on cryptocurrency mining is having a positive impact, including opening more mining operations in the West, a market that once contributed only a fraction of the global Bitcoin hash rate. Bitcoin mining operations in the U.S. alone have seen their global share of Bitcoin hash rate increase from 4% to 17% since August 2019. China’s crackdown has opened up potentially lucrative opportunities for miners as other countries, and even states within the U.S., such as Texas, vie for their corner of the Bitcoin market. Mining operations in Canada and Germany have seen an increase in hash rate contributions as well, making these countries the 7th and 8th largest contributors, respectively.
Iran is currently the fifth largest hash rate contributor, but problems continue to plague the future of mining there. In March 2021, Iran was contributing 4.64% to the global hash rate, an increase in 2.9 percentage points since August 2019. However, while the country has granted over 1,000 mining licenses to lure miners leaving China, it has also made moves to control the use of cryptocurrencies and recently banned mining for 4 months and seized over 7,000 mining machines in June amid the ban.
Perhaps the biggest news resulting from the hash rate migration is that Kazakhstan has emerged as the third-largest contributor to the global Bitcoin hash rate. The Cambridge Bitcoin Electricity Index ranked Kazakhstan’s average monthly hash rate share at 8.19%, a number that is sure to increase after BIT Mining announced it plans to deploy 2,500 Bitcoin miners in the Central Asian country. Recently, Shanghai-based The9 has announced plans to build a crypto mining site in Kazakhstan with a promised capacity of 100 megawatts. Currently, cryptocurrency is treated as property in Kazakhstan rather than a form of currency.
Ultimately, the crackdown in China has had a drastic impact on bitcoin mining, but resilient as ever, the hash rate migration highlights a key ability of the network to do what it is designed to do: enable decentralization.