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Bitcoin mining industry breaks away from China


China is the most important epicenter of the Bitcoin mining industry in the world. However, its dominance in this area appears to be declining. At the same time, nations like the United States and Kazakhstan are rebounding.

However, China’s hash rate power could be affected by a number of factors. This is expressed in the drop in electricity consumption in the mining industry in recent weeks.

According to the recent analysis of the analytical TokenInsight, the decrease in mining electricity consumption has been significant. It would be a 10% drop. This fact could be considered positive for the purposes of greater decentralization of bitcoin extraction.

Bitcoin mining industry is not the same after Halving

Halving, for many, is the most important factor in terms of the loss of China’s concentrated power in mining. The distribution of the most powerful equipment is easier abroad than within the Asian country.

This means that, while in China there are consolidated and stable farms, which use obsolete equipment. In countries like the United States, the industry is just emerging and is establishing itself with the latest equipment. Additionally, the cost of electricity in China is very low, especially in winter, which does not make the renewal of ASICs urgent.

After Halving, on May 11, the Bitcoin mining industry suffered the rewards cut. The impact, although widespread, in China has been felt with particular force. This is due to the amount of old mining equipment that remains active. Many farms have gone offline, influencing the country’s hash rate loss.

Electricity cost and state pressure

Beijing’s pressure against the Bitcoin mining industry has dropped since it was announced that there were no longer any short-term plans to outlaw it. However, the siege episodes have not completely disappeared, keeping farm owners concerned.

Recently, in Yunnan province, local authorities ordered the dismantling of 57 mining projects. The reasons for this were an alleged installation of the same without due regulation. Similarly, the local government tries to link the explosion at a hydroelectric plant with illegal mining actions.

Near Yunnan, is the Sichuan province, another of the great focuses of virtual mining. Between both provinces, there is a large part of the mining power of the country. There, the low costs of energy in winter time are notable.

Despite this, some analysts believe that it is useless to have advantages in terms of electricity, if the profits should be used to cover debts. But it is not only about debt, but also pressure from the authorities in some regions like Yunnan.

Although China continues to dominate the Bitcoin mining industry, in the U.S. More advantageous conditions are created for investors. Source: Cambridge University

In search of new horizons

All this complex web of events in China has caused the Bitcoin mining industry to look for more comfortable places. This is expressed in the fall in electricity consumption from 75.63% in September 2019, to 65.08% last April, according to TokenInsight.

At the same time, in the United States, where the industry is becoming increasingly attractive to investors, the relationship is reverse. In the same period of time, the increase in consumption in the sector increased from 4.06% to 7.24%, which represents an increase of 78.33%.

According to data from the Cambirdge Center for Alternative Finance, China’s dominance in mining remains overwhelming. But, there is already a decentralizing trend. As shipments of new-generation equipment begin to mass, China’s loss of dominance will expand.

The decentralizing trend of the Bitcoin mining industry is being noticed by top analysts. At the beginning of this year, Barry Silbert, founder of Grayscale Investments, highlighted in a conference with investors, that mining was at the gates of a diaspora from Asia to North America.

“What I have seen recently, probably over the last three to six months, is a real increase in attempts to move much of the mining activity from China to the United States and Canada,” he said.

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