Thread by @HenriArslanian

1/ Is Bitcoin mining making a comeback in China despite the ban? How did the U.S. state of Georgia overtake Texas as America’s Bitcoin mining hub? And what is happening with Bitcoin mining in Russia and Kazakhstan?

Time for a thread 🧵 👇

2/ As recently as May 2021, China was the uncontested global leader in Bitcoin mining, with over 65% of the global Bitcoin hashrate.

3/ But that drastically changed the next month when China banned Bitcoin mining. In a matter of weeks, China’s share of global Bitcoin mining plummeted from 65% to 0%. Other countries, notably the U.S., took advantage of this and rapidly increased their share of global mining.

4/ It was thought that Bitcoin mining would never return to China.

However, a surprising report from @CambridgeAltFin dropped a bombshell: China’s share of mining has surged back up to 22.3%.

Many scenarios are possible.

@CambridgeAltFin 5/ First, while most Chinese miners shut down operations in China and moved to friendlier jurisdictions like the U.S. and Kazakhstan, it is very likely that some simply shut down their machines for some time and layed low.

@CambridgeAltFin 6/ Second, the reality is that while the central government wants to ban Bitcoin mining, many provincial governments, particularly those with excess electricity, are more than happy to have them continue to operate.

@CambridgeAltFin 7/ At a time when the economy is suffering due to the government’s zero-Covid policy and the fact that the central government is busy with more urgent priorities, it is easy to see how such an activity can take place underground (something that many had long suspected).

@CambridgeAltFin 8/ Miners also likely resorted to VPNs to mask their presence, switching their IP addresses to Western countries like Ireland and Germany, which not only boast remarkably strong internet privacy laws but had no significant mining activity to speak of.

@CambridgeAltFin 9/ The second big surprise involves the latest U.S. data.

We all knew that a majority of Chinese miners had relocated to the U.S. following the ban.

@CambridgeAltFin 10/ And according to recent data, the U.S. continues to maintain its leading position in global Bitcoin mining, with installed Bitcoin mining capacity climbing from  42.74 EH/s (35.40%) in August 2021 to 70.97 EH/s (37.84%) by January of this year.

@CambridgeAltFin 11/ But what's interesting is the mix of states dominating mining in America, with one particular state standing out: Georgia.

@CambridgeAltFin 12/ Georgia (30.76%), Texas (11.22%), and Kentucky (10.93%) are responsible for more than half of America’s overall hashrate. While mining in Texas has been reported on for several months now, few expected Georgia to take such a large share of mining.

@CambridgeAltFin 13/ Some of the biggest factors driving the concentration of miners in these states can be attributed to easy access to cheap electricity, hosting capacity for mining facilities, and the passage of favorable, pro-crypto state legislation.

@CambridgeAltFin 14/ Mining isn’t just limited to these states, however, with New York (9.77%), California (7.9%), North Carolina (4.7%), and Washington (4.1%) all featuring a visible mining presence.

@CambridgeAltFin 15/ The third interesting takeaway revolves around Kazakhstan and Russia.

@CambridgeAltFin 16/ Kazakhstan had emerged as a very attractive location for miners fleeing China following crackdowns on crypto activities last year. By last August, Kazakhstan’s share of the Bitcoin network’s total hashrate had climbed to 18.10%.

@CambridgeAltFin 17/ But following numerous power outages in late 2021 and nationwide unrest stemming from mass protests throughout the country in January (in which the government shut down the internet for over a week), Kazakhstan-based miners were forced to suspend operations.

@CambridgeAltFin 18/ Given that increases in the prices of gas and electricity were a central component of protestor complaints, the government quickly increased taxes on mining whilst cracking down on non-registered mining outfits.

@CambridgeAltFin 19/ As a result, Kazakhstan’s market share has plummeted to 13.22%, and its future as a global Bitcoin mining hub is now in question.

@CambridgeAltFin 20/ Meanwhile, Russia’s share of the global hashrate plummeted from 11.23% in August 2021 to 4.66% by January. Similar to what we saw in Kazakhstan, Russia briefly benefited from the flood of miners leaving China thanks to its geographic proximity and ample energy reserves.

@CambridgeAltFin 21/ But by January Russia’s central bank had come out strongly against Bitcoin mining, going so far as to try to outlaw the activity entirely. And the invasion of Ukraine one month later and the ensuing sanctions from around the world hammered mining in the country even more.

@CambridgeAltFin 22/ But despite all of these developments, the Bitcoin hashrate is growing stronger.

@CambridgeAltFin 23/ Following China’s ban on mining, the global hashrate plummeted to a new low, bottoming out at 57.47 Exahashes per second (EH/s) on June 27, 2021.

@CambridgeAltFin 24/ But by the end of last year, the total network hashrate had almost recovered to where it was before the ban, reaching a level of 193.64 ET/s on December 21, 2021.

@CambridgeAltFin 25/ By February, the network hashrate hit a new all-time high of 248.11 ET/s. A high hashrate is important, as it shows the strength of the Bitcoin blockchain.

@CambridgeAltFin 26/ Ultimately, this data provides us with some fascinating new insights into the shifting Bitcoin mining landscape nearly a year after the implementation of China’s ban. 

Will be very interesting to follow these fast-moving trends moving forward.

@CambridgeAltFin 27/ Hope this was a useful thread. If you enjoyed this content, make sure to subscribe to my newsletter, where I break down all of the latest major developments in the crypto ecosystem:

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