China’s mining shutdown has led to a greater distribution of Bitcoin’s hashrate share. USA, Kazakhstan and Russia have become the main mining markets.
Following the repression of China, the United States has positioned itself as the epicenter of mining Bitcoin globally, according to the latest data shared by the University of Cambridge.
According to the Cambridge Bitcoin Electricity Consumption Index (CBECI), miners from The United States now has a 35.4% share of the mining market for Bitcoin, in terms of the total global distribution of hashrate. The North American nation’s positioning comes after the Chinese government banned cryptocurrency mining earlier this year.
The CBECI data also shows Kazakhstan (18%) and Russia (11%) as the next major mining centers in Bitcoin outside the United States. These three nations have gained significant market share in the wake of the Chinese offensive. According to the investigation, these prohibitive measures reduced China’s participation “effectively zero“.
It should be noted that the hashrate, or hash rate, is the unit of measurement of the processing power of a network Blockchain. A lower hash rate means less competition among miners to validate new blocks. It also means that the network is less secure, since the scale of resources required to perform an attack is reduced by 51%.
China loses its crown
China has long held a stance against cryptocurrencies. The government had maintained a ban on trading such assets since 2017, but this year it has redoubled those measures, first shutting down mining operations in the region, then ruling virtually all crypto activities illegal.
At the beginning of the year, these prohibitive policies had a negative effect on the power of the main cryptocurrency network; as well as in the commercial performance of the Bitcoin.
“The immediate effect of the government-imposed ban on crypto mining in China was a 38% drop in the hash rate of the global network in June 2021, which roughly corresponds to China’s share of the hash rate before of repressionMichel Rauchs, Digital Asset Leader at the Cambridge Center for Alternative Finance (CCAF), highlighted in a report.
These figures suggest that the Chinese miners ceased operations simultaneously after the government announcements. Although it is possible that undercover mining operations are still ongoing despite the ban. However, this crackdown also led to an exodus of miners and provided the opportunity for other jurisdictions to join the industry.
ANDn April 2021, the United States had only 16.8% of the share of hashrate global, which means that the US market share has increased by 105%. Similarly, Kazakhstan and Russia have increased their share by 120% and 61%, respectively.
Good sign for Bitcoin
Beyond the three new mining centers, Canada (9.55%), Ireland (4.68%), Malaysia (4.59%), Germany (4.48%) and Iran (3.11%) represent the following participations of hashrate more important. Rauchs opined in this line that the data indicates that the miners have already been successfully located abroad, which represents a positive step for the security of the network of Bitcoin.
The effect of the Chinese crackdown is a greater geographic distribution of hashrate around the world, which can be considered a positive development for network security and the decentralized principles of Bitcoin.
It seems that China’s reign in the mining industry of bitcoins It is reduced as companies in the sector see the need to distribute their operations instead of centralizing them in one place. Let’s remember that for 2019, China came to represent more than 70% of the total global hash rate of the network Bitcoin.
Although the immediate trend suggests that there will be no clear winner, this distribution of miners and hash rate share appears to be helping the price of Bitcoin, which has recovered about 83% since the crash in July (coinciding with the crackdown in China) to currently trade above USD $ 55,000.
Hannah Estefanía Pérez’s version / DailyBitcoin
Image from Unsplash