Despite Beijing’s crypto crackdown, China still made a comeback as a global bitcoin mining powerhouse.
Having been banned, research by the Cambridge Centre for Alternative Finance found a surge in covert mining operations that leads the country to be now the world’s second-largest location for bitcoin mining, behind the US.
“In China, following a sudden uptick in covert mining operations after the June 2021 government-mandated ban on Bitcoin mining, the country has re-emerged as a major mining hub,” the CCAF said in its report published Tuesday.
Before being completely banned in October making all cryptocurrency-related business activity illegal in the country, China was the leading bitcoin miner. According to the research, Beijing’s efforts to clamp down on bitcoin mining prompted a upwards incline in underground activity.
During the period between September 2021 and January 2022, researchers noted in their study that the Chinese bitcoin miners were accounted for 21.11% of the global hashrate.
“This strongly suggests that significant underground mining activity has formed in the country, which empirically confirms what industry insiders have long been assuming,” the report said.
As miners shifted abroad, the Chinese government ban that led to an immediate decline in the global hashrate total was quickly reversed.
“By the end of 2021, total network hashrate had almost fully recovered to pre-ban levels,” it said. “The upward trajectory continued in early 2022, and culminated in a new all-time hashrate high.”
U.S. was accounted for 37.84% of the hashrate, as the research found, while Russia’s share dropped from 11.23% in August to 4.66% by January.
Kazakhstan turned to become the destination for crypto miners fleeing the Chinese ban, driving the hashrate upwards to 18.10% in August. However the strict rules introduced by its government to address power shortages brought its share down to 13.22%.
China’s harsh clamp down on crypto sent ripples across the industry. The US with the opportunity to get ahead becoming the world’s biggest bitcoin miner for the first time, as the result of this.