In the wake of China’s sweeping crackdown on the crypto industry, the US has taken the Bitcoin mining mantle for the first time – and industry CEOs don’t see the trend stopping if early.
“I anticipate that the United States will continue to play a leading role in terms of shares due to jurisdiction,” said the CEO of mining company Bit Digital. Bryan bullet in an interview with CoinDesk. “No one wants to operate in a region where they face existential risks,” he added.
In fact, the Bitcoin network hashrate, the measure of computational resources used to conduct mining activities, has recovered from its July lows, even after China’s ban forced miners to shut down operations in the region. . The Bitcoin network hash rate rose about 117% to 133 EH / s as of October 12 from its July low of 61 EH / S, according to data analytics company Glassnode.
New report of the Cambridge Center for Alternative Finance (CCAF) now confirms that since China’s ban, miners outside the region, mostly from the United States, have taken over Bitcoin’s global mining operations. The United States accounted for 35.4% of global hashrate at the end of August, more than double the 16.8% at the end of April.
Meanwhile, mining operations in mainland China have effectively fallen to zero, from a peak of 75.53% of the global bitcoin mining hashrate in September 2019. Kazakhstan and Russia now follow the United States with hashrate shares of 18.1% and 11%, respectively, up from 8.2% and 6.8% in April, according to the CCAF report.
Geopolitics of bitcoin mining
For any industry to operate a profitable business, a secure jurisdiction is one of the key considerations, and given that the United States has a stable and transparent regulatory regime that takes the industry into account before making any changes to the law. law, is the main reason the United States will continue to increase its share and maintain its dominance, Bullett said.
Geopolitical certainty aside, miners in the United States also benefit from better access to infrastructure and a lower cost of electricity, according to Dave Perrill, CEO of data center operator Compute North. “I think the United States will continue to be the leader, both in terms of scale, cost and geopolitical risk,” Perrill said in an interview with CoinDesk.
In addition to the winning recipe for the United States, Paul prager, chairman and CEO of mining company TeraWulf Inc., said, “I think the main reason China kind of missed the ball here is because it couldn’t control it and Bitcoin is all about transparency, democratic values and decentralization. He also suggested that the United States has an excellent regulatory environment, “rule of law” and high availability of electricity, which is attracting more miners to the region.
Bitcoin Resilience Test Case
The great migration of miners to the United States has created a unique situation for the entire crypto ecosystem as the world will be watching if a government can shut down technology that is supposed to be decentralized.
“There are clearly countries that are able to shut down the web or at least control what citizens can see on the web. The jury is still out on whether governments could apply similar controls on the blockchain, which is possibly the biggest systematic risk for the technology, ”said Max Galka, founder and CEO of blockchain analytics company, Elementus.
Read more: China FUD on Bitcoin Mining is ‘Now Not Applicable’, Luxor Report Says
China’s ban presents an “interesting test case” to see whether a government can actually ban the technology and how industry participants respond to such moves, Galka said in an emailed statement to CoinDesk.
“If China puts this ban in place and the activity manages to continue anyway, then I think the cryptocurrency ban no longer becomes an option for governments,” he added. .
Regardless of how China’s dynamics unfold, regulatory certainties, access to cheaper energy, and the ability to build the infrastructure necessary for smooth mining will likely help the United States maintain its position. leader in the mining industry.
“Given all of these reasons, it makes sense that we have been dominant in bitcoin mining, and we will continue to improve the positions we have as we move forward,” said Prager of TeraWulf.