China Secretly Controls 55% of Global Bitcoin Mining Operations Despite Crypto Ban

Key Takeaways: 

• China still controls 55% of the global Bitcoin mining hashrate.
• U.S. mining firms account for around 40% of the global Bitcoin mining hashrate.
• U.S. pools serve institutional Bitcoin miners, while Chinese pools focus on smaller Asian miners.

China dominates the Bitcoin mining space despite the country's ban on cryptocurrencies. A recent analysis shared by CryptoQuant CEO Ki Young Ju shows China controls 55% of the global hash rate, surpassing the U.S. This dominance raises questions about the effectiveness of the ban and China’s true stance on crypto mining.

China Remains a Major Player in the Bitcoin Mining Industry

Three years after Beijing's sweeping ban on cryptocurrencies, China has unexpectedly retained a stronger grip on the global Bitcoin mining space than the US. 

According to Ki Young Ju, while US-based pools cater to large institutional players who have invested heavily in infrastructure and compliance, Chinese mining pools continue to support smaller, more agile miners across Asia. 

#Bitcoin hashrate dominance is shifting to U.S. mining companies.

Chinese mining pools operate 55% of the network, while U.S. pools manage 40%.

U.S. pools primarily cater to institutional miners in America, while Chinese pools support relatively smaller miners in Asia. pic.twitter.com/kepopLWBSD

— Ki Young Ju (@ki_young_ju) September 23, 2024

One key reason for China’s continued presence in Bitcoin mining is the adaptability of its miners. 

Despite the government's hardline stance against crypto operations, the country's Bitcoin miners have demonstrated resilience and ingenuity in the face of state opposition. 

Some have shifted their operations abroad, particularly to nearby regions with more lenient crypto regulations. 

However, a considerable number of miners have chosen to remain within China's borders, covertly managing their activities through sophisticated remote networks. This strategy has allowed many to circumvent official restrictions and continue contributing to the global Bitcoin mining hash rate. 

Two countries having 95% of mining hash rate. I wonder why, there's other places of the world with cheap energy. Do they gobble up all the newest asic hardware?

— PΞTE | Builder By Day, Trader By Night (危機) (@QuantArcane) September 23, 2024

The appeal of certain Chinese regions, such as Sichuan, remains crucial in this ongoing mining activity. Blessed with abundant hydroelectric resources, these areas offer miners some of the world's most cost-effective operating conditions.

The abundance of cheap electricity is a major factor in why China continues to be a mining hub despite the government’s attempt to halt these activities. 

Miners in these regions have long relied on renewable energy sources, keeping their costs low and profits high, which has helped Chinese mining pools stay competitive.

However, Ki Young Ju of CryptoQuant believes this dominance might not last forever. 

As China’s regulatory environment continues to tighten its grip on cryptocurrency operations, miners operating in the country are finding expansion opportunities constrained. Consequently, we're witnessing a gradual but significant migration of hash rate dominance towards operators in the US.

Can a Regulatory Shift Propel China to Even Greater Hashrate Heights?

Despite the shift, recent discussions suggest that China may be shifting its stance. The country is considering integrating cryptocurrency transactions into anti-money laundering (AML) regulations by 2025, hinting at a more pragmatic approach. 

This move could signal a renewed interest in staying competitive with the U.S., where institutional mining pools are gaining ground.

🚨BIG BREAKING🚨

CHINA WILL UNBAN #BITCOIN IN NEXT DAYS : SOURCES pic.twitter.com/HZJpEdPLjR

— CAPO (@CapoMetaDao) August 18, 2024

While many Chinese Bitcoin miners have gone underground or moved operations abroad due to strict regulations, a potential easing of crypto restrictions will likely come with tight controls to manage financial risks and prevent capital outflows – key concerns for the Chinese government.

Nevertheless, the global crypto community is closely watching these developments. A regulatory shift in China would significantly impact Bitcoin mining and the broader crypto industry. 

Whether this shift will happen remains uncertain, but China’s influence on the market is undeniable, and any changes could reshape the industry.