Bitcoin mining has made a major comeback in mainland China, according to a report by the South China Morning Post. The Chinese return to the mining stage has occurred roughly 4 years after the blanket ban imposed by the CCP on this resource-intensive process. The quiet revival is all about making use of the abundant energy surplus in some of the more remote areas of the country, particularly in the far West.
The Asian economic giant was one of the biggest destinations for Bitcoin miners prior to 2021 due to an abundant supply of cheap hydel electricity and availability of mining hardware. The Chinese government back then didn’t sanction these operations, but looked the other way because it wanted the country to indirectly lead the digital currency revolution.
However, the situation suddenly changed in 2021 when China reversed its de facto policy and announced a blanket ban on the industry. It evicted the miners, many of whom found their way to countries like Kazakhstan, Russia, and even the United States.
China Now Operates 14% of all Bitcoin Mining
After the quiet, yet sudden revival of Bitcoin mining in China, the country is now home to around 14% of the total hash rate of the mining industry, ranking it third behind the US and Russia. Other estimates put the Chinese share of the market even higher, at anywhere between 15-20%.
The autonomous region of Xinjiang in the West of the country has emerged as a major hub of Bitcoin mining. The area has a sparse population and abundant surplus electricity that cannot be transmitted to other parts of the country. Bitcoin mining appears to be a productive use of the resource, which would otherwise go to waste.
Canaan Inc., which manufactures some of the top Bitcoin ASIC miners, recently recorded a stellar quarter in China and has claimed it is playing within the rules.
The Future
China’s Bitcoin mining boom is going strong, but it legally operates in a gray area because the 2021 ban is still effectively in place. Reuters reached out to the National Development and Reform Commission, which issued this ban regarding this development, but they gave no response.
The mining sector, therefore, is likely to remain a lucrative yet risky bet in the country as Chinese authorities have a history of raiding, confiscating equipment, and crypto over the years. It is likely that the government may treat mining the same way it deals with crypto; don’t get caught with it.
Source: https://zycrypto.com/bitcoin-mining-makes-a-comeback-in-china-commands-14-of-hash-rate/
