Bitcoin miners in China account for two-thirds of the global network’s processing power, known as “hashrate,” with southwestern Sichuan province making up more than half of the world’s mining power, according to a new report.
Why it matters: China is home to some of the biggest cryptocurrency mining firms in the world, including Bitmain and Canaan Inc. However, authorities have been tightening their oversight of the mining industry, which flourished as a regulatory gray area.
Details: Research from London-based digital asset management firm CoinShares shows mining farms in China account for 66% of the global hashrate—a measure of computing power that dictates the speed of bitcoin mining—up from 60% in June and the highest in nearly two years since it started tracking hash-rate, according to a Reuters report.
- The increase may be due to the deployment of more powerful mining machines, said Chris Bendiksen, head of research at CoinShares.
- Cryptocurrency mining has become more difficult, according to the research, because competition has increased. There are more machines deployed now than ever before, all competing to mine bitcoins.
- The bitcoin network’s hashrate increased 80% since June, partly due to the strong profitability of crypto mining operations and the deployment of more advanced machines, according to the report.
- China’s share of global hashrate may fall in the future as other markets gain access to Chinese-made mining rigs, the report said. China is the world’s leading producer of powerful mining rigs.
Context: A majority of the world’s cryptocurrency mining activity is concentrated in China because of its abundance of cheap electricity. Popular locations for mining include provinces like Sichuan and Yunnan with inexpensive hydroelectric power and the coal-rich Inner Mongolia.
- In April, the National Development and Reform Commission proposed to phase out cryptocurrency mining. In September, authorities in Inner Mongolia said it would pull its support for the mining industry.
- Chinese crypto mining equipment manufacturer Canaan Inc. went public in New York last month in a disappointing market debut.