The United States has overtaken China with the largest share of global bitcoin mining, data released Wednesday by Britain’s Cambridge Center for Alternative Finance showed. The numbers show the impact of a crackdown on bitcoin trading and mining launched by China’s State Council or Cabinet in late May that devastated the industry and caused miners to close their stores or move abroad.
China’s share of the performance of computers connected to the global Bitcoin network known as the “hash rate” had fallen from 44 percent in May to zero by July, and was as high as 75 percent in 2019, according to the data showed. Bitcoin price in India stood at Rs. 45.28 lakhs as of 11:30 am IST on October 14th.
Miners elsewhere have closed the gap, with mine manufacturers shifting their attention to North America and Central Asia, and larger Chinese miners also relocating, although the process is fraught with logistical difficulties.
As a result, the United States now accounted for the largest share of mining, roughly 35.4 percent of the world’s hash rate as of late August, followed by Kazakhstan and Russia, the data showed.
Bitcoin is created or “mined” by high-performance computers, usually in data centers in different parts of the world, that compete to solve complex mathematical puzzles in a process that uses intense electricity.
Russia’s low energy costs and cool climate allowed some companies that used excess electricity earlier this year to capitalize on Bitcoin’s rising prices, but concerns about illegal mining are growing.
In a letter to the government in Moscow at the end of September, Igor Kobzev, governor of the Russian region of Irkutsk, pointed to an “avalanche-like growth” in energy tariffs and blamed the underground mining of cryptocurrencies for this.
“(The situation) is exacerbated by the mining ban imposed by the Chinese authorities and the relocation of a significant amount of equipment to the Irkutsk region,” Kobzev said in the letter, according to a report in Vedomosti newspaper on Wednesday.
Authorities elsewhere are more tolerant or even welcome bitcoin mining, while the Chinese authorities announced even stricter rules for bitcoin mining and trading last month.
“Our current focus is on accelerating the construction of compliant mining farms in North America and Europe,” a representative of mining rig manufacturer Ebang International Holdings told Reuters after the recent raid.
But the players in the industry remain injured.
“As a veteran who witnessed the birth of the industry in China, I find the situation today deplorable,” said Mao Shihang, founder of F2Pool, once the world’s largest bitcoin mining pool, and co-founder of Cobo, a headquartered crypto asset in Singapore managing director and administrator.
“China is losing its share of computing power … the focus of the industry is shifting to the United States,” he said before the Cambridge data was released.
© Thomson Reuters 2021
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