The United States is now the top location for bitcoin miners in the world, according to new data from the University of Cambridge, breaking China’s stranglehold on the industry after Beijing’s cryptocurrency crackdown sent miners scrambling to new locales. 

KEY BACKGROUND

Bitcoin mining is the process through which bitcoin is awarded to computers solving complex problems. These systems consume vast amounts of energy, which is available cheaply and in abundance in China, though often from dirty sources like coal, which is at odds with China’s climate goals. Miners have been scrambling for a new home since Chinese officials announced a crackdown on mining and trading and parts of the U.S., notably Texas, have proven to be an attractive location for miners seeking cheap—and often renewable—energy. The mass exodus from China has accelerated and amplified this migration. 

KEY POINTS

The U.S. has become the world’s epicenter for Bitcoin mining after a crackdown in China effectively eliminated the practice in the former cradle of the industry. 

At the end of August, America 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’s more than double the activity seen in April.

The surge in the country’s relative share has been driven by China’s move to whittle down the industry to control financial risk. In the early days of Bitcoin’s 2009 inception, the Asian nation was the base for the biggest miners tapping into cheap electricity from coal and hydro plants.

Now, Beijing’s intensifying efforts to curb the cryptocurrency market, announced in May, is paying off. China’s observed share of Bitcoin mining has effectively hit zero, the Cambridge researchers found. That’s down from as high as 75 percent in September 2019 when Cambridge started collecting data. It’s also a marked decrease from the 46 percent level notched in April just this year. 

There’s a strong possibility that covert mining is still happening in China, but routed through virtual private networks that make it appear the computers are operating in another country. Recent increases in the hash rate in Ireland and Germany are likely the result of miners using VPNs or proxy servers, according to Cambridge research. 

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