The United States surpasses China for the first time as the number one destination for bitcoin miners. The effects of the Chinese ban against cryptocurrencies consolidate a trend observed since the beginning of the year and recorded by Cambridge University data: in July, 35.4% of the bitcoin hashrate – or the collective computing power of the cryptocurrency miners – resides in the United States, an increase of 428% compared to September 2020.
In 2020, China was by far the main destination for bitcoin minersDragon Country held a 67% hashrate in July a year ago, according to the Cambridge Center for alternative finance. But Beijing’s crackdown on virtual finance has led to what has been defined by analysts as the “great mining migration”.
Beijing’s ban on cryptocurrencies and the escape of miners
Last month, the Central Bank of Beijing banned virtual currencies stating that “they do not have the same legal status as legal tender and cannot be distributed on the market as money”. There People’s Bank of China it also defines exchanges and virtual currency transactions “Financial activities that are illegal and are strictly prohibited”.
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For China, virtual currencies “have spread, upsetting the economic and financial order, fueling money laundering, illegal fundraising, fraud, pyramid schemes and other illegal and criminal activities”.
But a study released in April showed that bitcoin mining is so energy-intensive that it threatens China’s CO2 emissions reduction targets: another reason for Beijing to discourage mining.
Texas has become the eldorado of bitcoin miners
There are some key factors that attract miners to the United States. Among these i low energy costs electric in Texas and, in general, the availability of renewable energy sources in numerous states, such as Washington, New York and Texas itself. Keeping costs competitive and paying attention to environmental impacts are also increasingly important elements for mining.
The use of electricity generated from green sources sheds a more positive light on the world of bitcoin and cryptocurrencies in general, often criticized for the enormous environmental impact of the computational calculation required.
“Mining is an activity that is affected by fluctuations in energy prices”, underlines the CEO of Blocstream, Adam Back. Without counting the impact of ESG issues (environment, social and corporate governance) on corporate strategies and on the choice of investments by financial companies.
Texas also offers a cryptocurrency-friendly regulatory framework and hosting infrastructure. “If you are trying to move hundreds of millions of dollars of miners out of China, the priority is to find geographical, political and legal stability,” notes Darin Feinstein, co-founder of Core Scientific.
Regardless of China’s crackdown on cryptocurrencies, the United States has built the ideal conditions for attracting bitcoin mining over the past few years, according to an analysis by Cnbc.com. In particular, in the last 18 months, in several US states (especially Texas) some digital currency companies have invested to bring mining equipment to the States and build an adequate hosting infrastructure. For example, Foundry has helped bring mining technologies worth over $ 300 million to North America.
Kazakhstan is the second largest mining market in the world
The US, however, does not have a market dominance of bitcoin mining comparable to that achieved by China. Other markets compete with America to attract cryptocurrency miners and on top is the Kazakhstan which holds an 18.1% share of the global bitcoin mining market. Kazakhstan is second only to the United States at the moment and its appeal is the wide availability of low-cost energy.
But it’s not green energy: electricity is mostly produced in coal-fired power plants. For this reason, analysts think that the Central Asian country is just a stop in the great migration of miners to the US – also because the Kazakh government is preparing, in 2022, to increase taxes on crypto-mining.
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