- The US now accounts for 35.4 percent of Bitcoin’s hashrate following China’s expulsion of Bitcoin miners.
- Crypto miners set up in the US owing to affordable power, renewable power sources, crypto-friendly lawmakers, and huge capital inflows.
The US has officially outdone China, for the first time, in terms of Bitcoin (BTC) mining hashrate. Such a position was only hinted at initially, but new data released by Cambridge University on Wednesday confirms it.
According to the University’s Centre for Alternative Finance, the US accounts for 35.4 percent, about a third of Bitcoin’s hashrate. The figure is a 428 percent surge since Sept. 2020.
The shift is owed to what is now known as “the great mining migration,” when Bitcoin miners in China mass migrated to friendlier regions when mining was criminalized. The miners were forced to go offline overnight, crushing 67 percent of China’s share of BTC hashrate. As of July, China’s average monthly hashrate was zero, the recent Cambridge report shows. Many miners moved to the US, hence its newfound dominance in the crypto mining industry.
Boaz Sobrado, a London-based fintech data analyst noted;
The whole narrative of China controls bitcoin is now destroyed,
The US: A safe haven to Bitcoin miners
Bitcoin miners are now flourishing in the US owing to the myriad incentives the nation offers. For instance, states like Texas boast of some of the world’s lowest power costs. This is a major mining incentive, considering energy prices are the biggest determinant of miners’ profits.
Moreover, the US hosts plenty of renewable energy sources. Washington and New York lead in hydroelectric power production. Texas, additionally, is increasing its wind and solar power output. New York, among other states, has invested in nuclear power plants for carbon-free electricity. Some miners also opt to use natural gas, which would otherwise go to waste in the oil fields of Texas. Already, this has begun changing the ‘Bitcoin is bad for the environment’ narrative.
Besides, Bitcoin miners are encouraged by the pro-crypto policymakers of states like Texas. The state also has a deregulated power grid with real-time spot pricing, allowing consumers to choose between power providers.
Preparation meets opportunity
In its years-long anti-crypto quest, China has been making its grounds increasingly inhospitable for crypto enthusiasts and miners. Meanwhile, the US, especially North America, has been revamping its crypto-mining infrastructure. Most of the newly-manufactured mining gear between May-Dec. 2020, was shipped to the US and Canada.
Moreover, many miners were able to secure financing by leveraging their multi-year profitability records. The Covid pandemic also led to stimulus payments, which many investors put into crypto mining operations outside China.
China’s neighbor Kazakhstan now trends behind the US, with 18.1 percent of the Bitcoin mining market. However, the nation’s miners mainly rely on eco-unfriendly coal mines for cheap and large energy suppliers. Experts think Kazakhstan is a temporary stop-over for Bitcoin miners from China before they travel further West. Also darkening Kazakhstan’s silver lining is the newly approved law to add taxes for crypto miners starting 2022.