The latest Cambridge Bitcoin Electricity Consumption Index (CBECI) hashrate figures will make interesting reading for anyone in the Bitcoin (BTC) mining space. (Updated at 15:18 UTC with the ‘Surprising resurgence’ section.)
Last year, the University of Cambridge’s Judge Business School reported that the “leading share” of global Bitcoin network hashrate “now sits in the United States, followed by Kazakhstan and Russia.” Indeed, per the August 2021 numbers, China’s hashrate sat at a big fat 0%.
But despite one of the most intense crackdowns on BTC mining anywhere in the world in September 2021, the latest CBECI data appears to show that Chinese hashrate actually climbed to 22.3% in September. And, in the months following (up to January this year), the data shows that Chinese BTC hasrate did not fall below the 18% mark.
The CBECI data – in fact – shows that Chinese hashrate fell from just under 50% of the global total in May 2021 to absolutely nothing in August before recovering to over 20% the following month.
Reports in China continue to suggest that some miners continued to operate underground in the months following the crackdown, but the majority of major industrial players are believed to have shut down their rigs.
On May 17, China’s CNR reported that the Energy Conservation Department at the Guangdong Provincial Energy Bureau had issued a notice warning residents and companies in the province about the risks involved with crypto mining and mining rigs.
Guangdong ordered residents to stop using rigs and stated that machines could be “confiscated according to the law,” adding that companies involved in illegal mining could be hit with business suspension orders or win-up notices.
However, such warnings have become less common in China in recent months – as have reports of police raiding illegal crypto mining “farms.” A number of mining pools have upped sticks and many others have closed their door to Mainland China-related participants.
In an article on the body’s website, the Cambridge-based group wrote of a “surprising resurgence” as the trend from zero to the high teens and then over 20% “quickly reversed” – due to “significant underground mining activity” that had “formed in the country” – and “empirically confirm[ing] what industry insiders have long been assuming.”
The body claimed that “access to off-grid electricity and geographically scattered, small-scale operations” were “among the major means used by underground miners to hide their operations from authorities and circumvent the ban” in China.
But the body conceded that the “abruptness of the resurgence” raised “questions” that could “be traced back to methodological trade-offs,” explaining:
“A comeback of this magnitude within the period of one month would seem unlikely given physical constraints, as it takes time to find existing or build new non-traceable hosting facilities at that scale. Instead, a more likely explanation lies within our top-down research methodology which is based on aggregated geolocational data reported by partnering mining pools.”
Indeed, the body further conceded that its approach was “theoretically vulnerable to deliberate obfuscation by individual miners who may, for various reasons, choose to conceal their location by using virtual private networks (VPN) or other proxy services.”
The CBECI mining map shows that the United Sates still has the lion’s share of the total average monthly hashrate share – with just under 39% in January 2022. China’s 21.11% was next. And only Kazakhstan, which has had its own run-ins with BTC miners, came anywhere close to the Middle Kingdom – with 13.22%.
In another curious development, Russia’s figure in January (prior to the conflict with Ukraine) was 4.66% – down significantly from August 2021’s figures of 11.23%, and also at a time when Russian media reports had claimed that mining was on the up in the nation.
The Cambridge-based body admitted that this data appeared “somewhat counterintuitive at first considering that Russia was believed to become an attractive location for Chinese miners thanks to its vast energy reserves and close geographical proximity.”
It claimed that “one deterring reason could be perceived political risk given the vocal opposition of the Russian Central Bank to Bitcoin mining, going as far as lobbying for outlawing this activity.”
However, this claim too appears somewhat problematic: The Central Bank’s opposition to all forms of crypto is nothing new. And, if anything, the Central Bank has found itself increasingly isolated in its anti-crypto stance in recent months, with a cross-ministerial and parliamentary consensus instead favoring the legalization of the BTC mining sphere. However, it still might be affected by the sanctions against Russia due to its invasion of Ukraine.
– Bitcoin Miners Hit With Record Difficulty as Profitability Drops
– Bitcoin & Crypto Mining in 2022: New Locations, Technologies, and Bigger Players
– China Says it Has Closed all Crypto Exchanges – But Traders, Miners May Still Be Active