China’s Hash Rate Share Has Been Declining Before Crypto Crackdown
The CBECI, which seeks to provide up-to-date estimate of the Bitcoin network’s daily electricity load, and the Cambridge Centre for Alternative Finance, partnered for the first time with four Bitcoin mining pools – BTC.com, Poolin, ViaBTC and Foundry – to get the new geolocational data to have an unprecedented empirical view of the geographical evolution of Bitcoin mining.
Their datasets reveal that China’s share of total Bitcoin mining power declined from 75.5% in September 2019 to 46% in April 2021 – before crypto mining restrictions were imposed in China.
A general view is that global hash power started dropping in late June following a 21 May 2021 statement that China wants to ban crypto mining activities in the country. Chinese Vice Premier Liu He and the State Council said in a statement that it is necessary to “crack down on Bitcoin mining and trading behavior” to protect the financial system.
Some restrictive measures were introduced afterwards after the ban announcement which, among other global factors, reportedly saw many Chinese miners move their mining machines to new locations like Kazakhstan, Russia and parts of North America.
The relocation process forced many of the miners to shut down their mining operations, cost them a lot in incurred expenses and also led to a drastic drop in Bitcoin hash rate power coming out of China.
Chinese miners finally settling down?
The estimated number of terahashes per second dropped from around 130m on June 19 to a low 84.8m as at July 3 according to Blockchain.com. But as at this writing, data shows the hash rate – the total computational power of server farms participating in Bitcoin’s consensus process – has started a slow climb to 96m.
This recovery path indicates that more of the miners who shut down earlier have been resuming operations in their new locations. It could also be as a result of some small hydropower stations in China starting their mining operations as well.