Chinese bitcoin miners don’t seem to be stopping

China’s reported hash rate dropped to zero for two months last year but has since returned.

Chinese bitcoin miners don’t seem to be stopping

Cambridge University’s Cambridge Centre for Alternative Finance (CCAF) made an update last week to its widely recognized (and justifiably so) Cambridge Bitcoin Electricity Consumption Index (CBECI), which aims to find and disclose the geographic location split of bitcoin miners worldwide.
Following the country’s crypto mining prohibition, China’s share in mining fell from 34.3 percent in June 2021 to 0.0 percent in July 2021, according to the last Cambridge report. According to last week’s update, China’s mining share increased from 0.0 percent in August 2021 to… 22.3 percent in September 2021.

Cambridge University’s Cambridge Centre for Alternative Finance (CCAF) made an update last week to its widely recognized (and justifiably so) Cambridge Bitcoin Electricity Consumption Index (CBECI), which aims to find and disclose the geographic location split of bitcoin miners worldwide.
China prohibited bitcoin mining in May 2021, according to the statistics. By July, hardly any miners were working in China. There were none in August, either. Then, in September, practically all of the miners who had gone returned.

Perhaps that isn’t evident, so I’ll state it: That did not occur. It is not straightforward to relocate mining operations. The majority of mining operations aren’t a few amateurs fooling around; Bitcoin has long outgrown that. Most miners are better described as commercial businesses, with triple net leases for warehouse space and reliance on complicated power purchase agreements for electricity.

The CCAF’s data gathering process is to blame for the appearance of the data. The CCAF collaborated with bitcoin mining pools to acquire IP-based geolocational mining facility data (pools allow a lot of different miners to contribute to mining, and the reward is then split among them according to their processing contribution to smooth out individual miner income).

Problems with hash prices and mining companies :

With bitcoin prices plummeting, there is now considerable anxiety about bitcoin miners and their profitability. Luxor Technologies created a statistic called hash price to reflect the expected value of mining. Hash price is measured in dollars per terahash per day, with a terahash representing the computing power given by mining equipment. Here’s how hash price has performed over the last month.

Hash price has fallen as a result of 1) the lowering USD price of bitcoin, 2) more miners coming online, and 3) the resulting higher network difficulty (the network adjusts how hard it is to mine roughly every two weeks, based on the amount of active mining power). It’s not exactly sunny, but it makes sense. And the drop is causing mining companies to tighten their belts or shut down. Many industry professionals are predicting that “only the strong will survive.”

In principle, miners turn off their devices when bitcoin values fall dramatically and it is no longer profitable to keep them working. Even while the hash price has reduced, we haven’t seen this kind of drop-down this time, and we have the public mining firm records to show it. Public miners have all publicly stated, “We are mining bitcoin, we want to mine more bitcoin, we will hold as much of the bitcoin we mine as possible, and we will use other sources of capital to fund operations and growth.”

That might be good, but when these miners are put under increasing strain, they may have duties to capital sources. Furthermore, if the market continues to deteriorate, these corporations may be forced to take action, such as begin selling their bitcoin. These aren’t the balance sheets of Apple or Google; they’re more like startups that happen to trade on public marketplaces.
Overall, there is little cause to be concerned about the mining industry as a whole. Bitcoin mining will be OK, but the cast of actors may shift since capital markets remain available until they aren’t. Bitcoin will benefit from it, but the corporation may suffer as a result.

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