The rapid decline of China as a crypto mining powerhouse has seen the US and Kazakhstan become attractive destinations for migrant miners.
The US is now the number one destination for Bitcoin miners, overtaking China following a crackdown that effectively eliminated the industry in the country.
As of the end of August, the US accounted for 35.4 percent of the global hash rate – a measure of computing power used to extract the digital currency – according to a Cambridge Centre for Alternative Finance study published on Wednesday.
That is a 427 percent increase from September 2020.
Meanwhile, Cambridge Bitcoin Electricity Consumption Index (CBECI) data shows China’s share of mining has now effectively hit zero – down from 75 percent last September and 46 percent as recently as April.
China’s fall from global mining powerhouse was set in motion this spring when a clampdown by the Chinese government took half the world’s Bitcoin miners offline.
In May, authorities intensified efforts to tighten the screws on the decentralised cryptocurrency market, ostensibly to control financial risk. By June, Chinese banks were told to stop facilitating crypto transactions and bans were issued on mining.
China’s crackdown initially led to a 38 percent fall in mining globally, CBECI said.
The latest data, covering four months to the end of August, shows Kazakhstan (18.1 percent) and Russia (11 percent) have the second and third leading global hash rates.China’s loss, America’s gain
Bitcoin mining is an energy-intensive process. To unlock more of the currency, miners must solve increasingly complex mathematical puzzles which require high degrees of computing power – and electricity.
Earlier research by CEBCI revealed the annual migration of miners in China – moving between provinces with cheap electricity from fossil fuel to regions where hydro-electric power was abundant.
Once the ban came into effect in June, miners had to source cheap electricity elsewhere.
The US ticked a lot of boxes for migrant miners searching for a new home.
For one, Texas’ deregulated electricity grid and cheap energy prices are a major incentive to miners who compete in a low-margin industry.
The US is also flush with renewable power sources. Washington state is a hub for low-cost hydro-powered mining farms, while New York produces more hydroelectric power than any other state east of the Rocky Mountains. Texas’ grid has been rapidly adding more solar and wind power.
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