In May 2021, China triggered some of the biggest downswings of Bitcoin’s history. After declaring Bitcoin mining illegal, the price of Bitcoin fell from a high of 60k to as low as 29k as the hashrate of Bitcoin plunged.
China, which once contributed 45% to the global hashrate of Bitcoin, now adds nothing to Bitcoin’s mining pool. The Chinese ban triggered what is now referred to as the Great Mining Migration, the movement of Bitcoin miners from China to other regions.
Desperate not to be put out of business, Chinese Bitcoin miners turned to other countries. The Bitcoin hashrate has recovered to its highest point since the ban in May, and the price of BTC hit a new all-time high.
The New Crypto Havens
Bitcoin’s hashrate recovery was helped by the new mining havens, the United States, Kazakhstan, Russia, and Canada. The United States now contributes 35% of the global hashrate, while Kazakhstan is currently in second place with 18% of the network’s mining.
Russia now contributes 11.2% and Canada 9.6% to the global hashrate of Bitcoin. Moreover, these regions proved welcoming to Bitcoin miners as they provide cheap consumer electricity with crypto-friendly policies.
Russia’s Siberia Irkutsk region has received the majority of Bitcoin miners in the country. Siberia is able to support Bitcoin mining because it has an abundance of stranded hydroelectric power (estimates are only 20% is used now), making it a destination of choice for environmentally conscious miners.
The climate of the region is also perfect for cooling the large numbers of ASICs in the industry. The Russian government has welcomed miners despite their prohibition on Bitcoin as a currency.
The scenario is almost identical in Canada with ideal weather and an abundance of consumer electricity. In June, Black Rock Petroleum announced a deal that, if it pulls through, could attract the lion’s share of the Bitcoin mining industry to Canada.
On The Flipside
What Happens if China Reverses the Ban on Mining?
Since Bitcoin surged to a new all-time high, rumors have been going around that China could be looking to reverse its ban on crypto mining. The rumors most likely gathered steam after the National Development and Reform Commission of China stated that it would add “virtual currency mining” to its list of eliminated industries only after it gets public options.
Days later, the commission reprinted news that the United States has surpassed China to become the largest Bitcoin mining country. Many interpreted this as China regretting its decision to outlaw crypto mining. So, what would happen if China reverses its ban?
When China announced a crackdown on Bitcoin mining in May, Kevin Pan, CEO of Chinese cryptocurrency mining company Poolin, stated, “We decided to move out, once [and] for all. [We’ll] never come back again.”
The cost of relocating a company along with its hefty mining equipment would certainly be cumbersome. So, relocating back to China just months after mining companies were forced out would not be an economically wise decision.
In addition, Chinese manufacturers of cryptocurrency mining equipment like Bitmain have halted the shipment of mining equipment into mainland China. Even if the country reverses its ban on mining, there is no guarantee that mining won’t once again be outlawed.
The best we could see is an uprising of new mining pools in China rather than a return of Chinese miners who fled during the great migration. The cost of migrating and returning to China would not be feasible for most mining companies.
Why You Should Care?
We are less likely to see a return of Bitcoin miners to China after its ban. However, the aim for crypto mining should now be to reduce their carbon footprint as they transition into greener sources of power.
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Source: Cryptocurrency - investing.com
