China Staging A Comeback to Bitcoin Mining, Carbon Emission Target Shaky
China may have been gone for a while but is back in the Bitcoin mining fold, as the Cambridge Centre for Alternative Finance (CCAF) has shown with its new mining map data. Covering September 2021 to January 2022, the CCAF states that the US grew to be responsible for producing 37.84% of the global hash rate while China has emerged to be a runner-up with a 21.11% share.
The figure, which supposedly came out from covert mining operations across the country, shows that China has outpaced countries that were already developing into major mining hubs following the Asian country’s initial ouster: Kazakhstan (13.22%), Canada (6.48%), and Russia (4.66%).
China is known to be the dominating country for Bitcoin mining up until 2021. The country reportedly had a share of almost 65% of hash rate contribution to the top cryptocurrency’s network to a point that the decentralization at the core of its technology was questioned.
Then the dominance level dropped flat to almost nothing after the ruling CCP slammed a ban on related mining activities in China last May. A clampdown on mining activities ensued thereafter until it was somewhat believed that the industry has been crippled completely as far as China is concerned.
Many Chinese miners relocated their operations abroad after the ban in what was considered to be the Great Migration. The fleeing miners have since contributed to the development of new crypto mining markets particularly in North America where the US has risen to be the leading country for the industry.
Meanwhile, with this new finding, the spread of Chinese miners to other parts of the world is now likely to collide with the regrouping of the home-grown market to stiffen competition on both sides.
With Bitcoin price struggling at a prolonged almost six months slow decline at this time, it is not clear what impact the news that Chinese Bitcoin mining is growing again would have on the top cryptocurrency’s recovery path.
What is clear is that falls in Bitcoin’s price since December 2021 have impacted mining ASIC prices as well as made miners unable to acquire hash rates as they did in 2021 when profitability was at multi-year highs.
Mining profitability and Bitcoin mining ASICs have been at their lowest since last summer, according to the Luxor Mining rig index. The decline has moved the crypto space from a seller’s market to a buyer’s market, one that differs from what followed the China ban which saw values drop rapidly over a 2-month period.
The report of discreet mining still being carried out to the point of clinching the number two spot indicates that the Chinese government ban, which took half of the Bitcoin network’s mining competition offline all of a sudden last year, is gradually being reversed albeit unofficially.
It also shows that the part of crypto mining, which reportedly threatened China’s set target to peak carbon dioxide emissions by 2030 and to achieve carbon neutrality by 2060 hence its ban as a policy intervention, would be revisited.
A joint study earlier this year finds that China’s supposed exit from the cryptocurrency mining space did not curb the carbon footprint left behind by the industry. Titled Revisiting Bitcoin’s Carbon Footprint, the new peer-reviewed study published in the energy research journal Joule, suggested that the cryptocurrency mining industry has rather increased its carbon emission since China left the scene.