China is back with a vengeance. The Cambridge Center for Alternative Finance, or CCAF, collected data “covering the period between September 2021 and January 2022” to his last study. The headline is that, with or without a ban, the Asian country controls 21% of the global Bitcoin mining hashrate. Since June 2021, we here at NewsBTC have been racking our brains trying to figure out Why did China ban bitcoin mining?. Maybe we were barking up the wrong tree all along.
According to CCAF figures, unsurprisingly, “the US has remained at the forefront of Bitcoin mining and has expanded its leadership position (37.84%).” For its part, “China has re-emerged as an important mining hub (21.11%). Kazakhstan (13.22%), Canada (6.48%) and Russia (4.66%) have been relegated to more distant places”. Let’s see what else we can learn from CCAF’s numbers.
Is China all the way back? How did this happen?
It turns out that CCAF’s analysis uncovered numbers that “strongly suggest that significant underground mining activity has formed in the country.” Can we be sure that the explanation is real? And if so, how did China’s underground bitcoin mining industry emerge so quickly?
“After the government ban in June 2021, the reported hashrate for the entire country plummeted to zero during the months of July and August. However, the reported hashrate suddenly returned to 30.47 EH/s in September 2021, instantly catapulting China to second place globally in terms of installed mining capacity (22.29% of the total market).”
The report wonders what happened, “a return of this magnitude in a month’s time would seem unlikely given physical constraints, as it takes time to find existing untraceable lodging facilities or build new ones on that scale.” And he theorizes that maybe the underground miners were using VPNs to hide their location and then suddenly decided they were safe enough to stop hiding. Which seems unlikely.
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Countries outside of China
Sadly, but unsurprisingly, the study also found that “hashrate recovery has not been evenly distributed.” How did the countries other than China fare in the Top 5?
- The United States “outpaced the rest of the world in terms of hashrate growth. This is evidenced by the increase in installed capacity from 42.74 EH/s (35.40%) in August 2021 to 70.97 EH/s (37.84%) in January 2022.”
- In Kazakhstan, for its part, “total hashrate continued to rise in September and peaked at 27.31 EH/s in October, until repeated power outages late last year and a week-long internet shutdown Earlier this year they forced the miners to temporarily suspend operations.”
- Surprisingly, “Russia, on the other hand, not only experienced a substantial drop in relative hash rate from 11.23% in August 2021 to 4.66% in January 2022, but also a significant decrease in the total contribution of the installed mining capacity from 13.56 EH/s to 8.74 EH. /s during the same period.”
- Last but not least, “Canada saw only a moderate increase in its hash rate from 11.54 EH/s in August 2021 to 12.15 EH/s in January 2022, resulting in a loss of 9.55% to 6.48% market share as total network hash rate. it was growing significantly faster. ”
CCAF Propagate FUD
Of course, the Cambridge Center for Alternative Finance couldn’t pass up the opportunity to spread some unfounded rumors about bitcoin mining. This is what the CCAF said:
“These geographical changes in mining activities highlight how relocations affect the overall sustainability of the network. For example, recent research has suggested that the Chinese decision to ban Bitcoin mining has worsened, rather than improved, Bitcoin’s environmental footprint.”
The CCAF is using the findings of this study, which basically says NOW believe what bitcoiners always said. That China was primarily using hydropower for bitcoin mining, and not coal. The fact is, when it comes to green energy usage, bitcoin mining is still the cleanest industry in the world.
Every time we find an intentional FUD spread like this here, we have to check who paid for the study. It turns out that the numbers come directly from the Cambridge Digital Assets Program. The CCAFs host the CDAP “in collaboration with 16 leading public and private institutions.” Among them we find the International Monetary Fund (IMF), Mastercard, Visa and the World Bank.
And in that moment, it all made sense.
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