Nov 30, · According to multiple reports from Chinese crypto news sources on Monday, the Yunnan province issued an order for power stations to cease supplying power to Bitcoin (BTC) miners in the region. Yunnan is China’s fourth-largest Bitcoin mining hub . Aug 05, · Estimates show that roughly 50% of the world’s bitcoin miners are located in China and a deep concentration of miners are located in the Sichuan province. Last year, Coinshares reported the concentration in China was around 64%. Aug 29, · In May, research from University of Cambridge revealed China, where bitcoin mining pools have prospered thanks to cheap, renewable electricity, Author: Billy Bambrough.
Bitcoin mining in china3 Things to Know About Bitcoin Mining in China
At the same time, other countries started heavily incentivizing mining operations. There are now several countries that offer better running costs and subsidies than China. Scandinavia is profiteering from this in particular, as they can also provide a setting with a cooler climate, which means that companies need to spend less money on cooling huge rigs and servers. All of this means that China has started to loosen its grip on the mining industry — although it still controls an overwhelming majority of operations.
With a natural diversification in mining-centric countries, things are set to change. However, this could be for the better. One of the main concerns surrounding Bitcoin mining, in general, is that too much of the overall hash rate is controlled by too few companies.
This mirrors the mainstream world of capitalism and centralization. The founding of Bitcoin was originally based around the idea of decentralization — or lack of single, controlling authority.
Mining has become such big business that individuals were priced out of the market a long time ago, but it is even worse if all those companies are in the same place. To put it simply, China has too much power in the Bitcoin world. A bit of national competition could well be a positive step. The other issue is that mining difficulty is now so high that energy demands are unreasonable. Many countries are clamping down on this, declining to offer reduced rates and subsidies.
This will force mining firms to look at more environmentally friendly alternatives. The final advantage to this shift is that it will help to safeguard Bitcoin over time. It is currently a tough environment for crypto as a whole, with the heady days of late no more than a distant memory. This would cause an absolute catastrophe in the Bitcoin world , with such a huge amount of mining taking place there.
The network would grind to a halt, and the price dip would likely be catastrophic. With major mining firms now located around the world, the effect would be far less devastating than even a year ago. If we look to , when there are no more Bitcoin to mine, then everything becomes speculative of course. With no more rewards, miners would only benefit from transaction fees, but mining would still be necessary to verify transactions.
In its current state, this would mean a major deflation of the mining market, with major firms closing down and walking away. This would then pave the way for a return to the individual, household mining. However, the most likely occurrence is that the way in which Bitcoin works changes.
An automated, proof-of-stake model is far easier to run, and it may be that forks in the future take Bitcoin in a new direction — far more successfully than previous attempts, such as Bitcoin Cash or Bitcoin Diamond.
Changes will be necessary to keep the network operating, and this is something that many are looking to tackle right now — not in years. Despite these issues though, mining remains a big business, and China remains the undisputed king.
But any diversification is positive for the integrity of what Bitcoin stands for — decentralization. So, perhaps there is a shining light amid the doom and gloom of late after all!
Should the Chinese government decide to crack down on Bitcoin, perhaps seeing it as a threat to their economy or a competitor to their own planned digital currency , they could wreak untold havoc in the Bitcoin ecosystem.
Thankfully, mining in China has begun to wane in recent years. They can own the equipment and direct the hashing power to whatever pool they want.
All while they benefit from the cheaper bulk electricity costs and advanced facilities purpose built for mining Bitcoin at scale. But beyond the active efforts of non-Chinese Bitcoin based ventures to reduce the reliance on Chinese mining, Chinese miners themselves are showing interest in leaving the region, and that is what we are going to focus on in our last chapter.
Having cracked down on cryptocurrency exchanges and ICOs, China is now planning to go after bitcoin miners. To do so, it is hitting where it hurts the most — limiting power supply. Without access to electricity, new bitcoins cannot be generated. The government is investigating power consumption of cryptocurrency miners to determine whether their use of cheap or free electricity has affected power prices in those areas. Recently, law enforcement in China confiscated computers used to mine bitcoins.
This was after a local power grid operator reported abnormal electricity usage. The report, however, did not say when the police confiscated the machines. One of the largest bitcoin mines belongs to Bitmain. Bitmain is located in SanShangLiang, and has expanded its operations to Canada and the US though many of their locations abroad had to be shut down due to insolvency.
While Bitmain remains a Beijing-based company, it has successfully set up a regional headquarters in Singapore and has satellite mining facilities outside of mainland China.
Beyond Bitmain, BTC. TOP which was once a large mining pool and farm in China has moved much of its operation to Canada. That is, unless major changes to the price of energy occurs or China decides to crack down even harder on Bitcoin mining though this looks fairly unlikely.
Thankfully, the amount of hashing power coming out of China is decreasing somewhat steadily in the last couple of years, and more and more efforts are being made to make mining more accessible to the everyday Bitcoiner. This is a welcome change, as ASIC mining has turned what was once a profitable home venture into something only incredibly sophisticated and well-funded operations can pull off while making money.
Who knows? With COVID19 raising tensions between the Chinese and US governments, we may see other countries reduce their dependency on China in as many ways as they can, and that may bring opportunities for Bitcoin miners to make it outside of China.
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Only a legal professional can offer legal advice and Buy Bitcoin Worldwide offers no such advice with respect to the contents of its website. Buy Bitcoin Worldwide receives compensation with respect to its referrals for out-bound crypto exchanges and crypto wallet websites. Jordan Tuwiner Last updated August 25, Chapter 1 Cheap Electricity.