Bitcoin mining has fully recovered after the Chinese ban, turning America into a mining mecca

Bitcoin mining has fully recovered after cryptocurrency penetration in China shut down more than half of the world’s miners almost overnight.

Recovery is measured using hashrate, a term used to describe the processing power of all miners on the Bitcoin network. China has long been the epicenter of the industry: according to previous estimates, 65 to 75% of the world’s bitcoin mining occurs there. But after Beijing took tough action against cryptocurrency mining in May, over 50% of Bitcoin’s hash rate disappeared from the Bitcoin network.

To date (Dec 11), data shows that the network has fully covered these losses. The network hash rate increased by about 113% in 5 months to 180.5 EH / s.

Bitcoin Hashrate Fully Rebuilt | Source:

“Bitcoin has successfully resisted a national attack by China that is suppressing it,” said Kevin Zhang, manager of the Foundry mining company.

The rise in hashrate could bode well for the world’s most popular cryptocurrency, which is 30% below last month’s high. According to Brandon Arvanagi, operator of Meow, a company that helps companies enter the crypto market, China’s ban is a clear signal to buy.

But for Arvanagi, the biggest takeaway from this whole test was the fact that Bitcoin mining went through its biggest stress test with some drama.

“The Bitcoin network has withstood a superpower attack and is stronger than ever in just six short months,” he said.

America becomes a mining Mecca

When half of the Bitcoin network went offline this summer, many experts said that miners in North America would reconnect to the network. Many predictions have also been made regarding the timeline that will bring the network back to the previous high.

Bitcoin engineer and miner Marshall Long, head of architecture at Rhodium Enterprises, a liquid-cooled bitcoin mining company, told CNBC TV that he was a little surprised by the rapid recovery.

“I think we’ll be here in late January – early February next year,” he said. Others think it will take longer, adding another 6 to 12 months to Long’s forecast.

The rapid recovery of the Bitcoin network is due to the fact that the United States laid the groundwork for it to become the new Mecca for mining, Zhang said. Zhang said the United States needs to grow, build infrastructure, and use its energy literacy.

Companies in the United States have quietly expanded their storage facilities over the years, betting that miners with adequate infrastructure will eventually open farms in the United States.

When Bitcoin crashed at the end of 2017 and the cryptocurrency market entered a multi-year crypto winter, there was not much demand for large bitcoin farms. Miners saw the potential and seized the opportunity to create a mining ecosystem in the United States.

“Large mining companies that go public have been able to raise capital for large purchases,” said Mike Colyer, CEO of Foundry.

Core Scientific founder Darin Feinstein agrees that the US mining infrastructure is growing rapidly. “We have seen a huge increase in mining operations looking to relocate to North America, mainly the United States,” he said.

Companies like Core Scientific continue to build storage during the crypto winter to enable new devices to be connected.

Alex Brummer of Luxor Mining, a team of seasoned miners, notes that emerging capital markets and financial instruments related to mining are also playing a large role in the fast-growing industry in the United States. Brammer said many US operators were able to expand quickly as they secured funding using profitability data over the years and existing capital as collateral.

Covid also plays an important role

While the global pandemic has damaged the economies of a large number of countries, government aid has proven to be a great boon for US mining companies.

“Printing money during a pandemic means more capital is required to deploy it,” explains Arvanagi. People are looking for places where they can put money. The appetite for big investments has never been greater. ”

This gamble was worth it. Data from the University of Cambridge show that the US is now the number one target for bitcoin miners, overtaking China for the first time.

Some stay in China

According to CNBC, many miners who do not have the resources to relocate have stayed in China and moved their operations underground. Some go through the back door and get their electricity directly from sources such as hydroelectric power plants in southern Sichuan. Others divide their mining operations into much smaller farms across the country, which are ignored by the authorities.

Whatever the reason Bitcoin’s recovery was faster than expected, said Bitcoin miner Alejandro de la Torre, who has mined cryptocurrencies around the world for years, including in China and almost always here in Austin, state Texas, told CNBC that the main lesson here: the sustainability of the global mining industry.

“I believe that all the Black Swan events that may happen to Bitcoin mining in the future will not be remarkable,” de la Torre said.