Cryptocurrencies are spreading worldwide unstoppably and the number of their users is constantly growing. Of course, this also brings a higher interest in their mining, which ensures the smooth processing of a huge number of transactions.
China is not the only country that has tried to permanently ban mining and the use of cryptocurrencies, arguing for energy consumption and possible destabilization of the country’s monetary policy. While you can be a judge of that, it seems that cryptocurrencies simply always find their way.
Mining ban in theory
Last year, China shook the crypto market quite fundamentally when it decided to ban the use of cryptocurrencies in international payments. They tried to justify this ban and frightened their people mainly by using cryptocurrencies in various illegal activities. This myth has been refuted countless times. They also mentioned the threat to their financial system through its destabilization.
Given that China covered up to 75% of the bitcoin mining hashrate in 2019, they decided to divide this ban into three separate phases. In the first phase, institutions were banned from engaging in any crypto transactions in May last year. The second phase followed in June and banned all domestic cryptocurrency mining, which subsequently dropped to zero.
The third and final phase was an absolute ban of the use of cryptocurrencies, which applied without exception to everyone. Guangdong (a Chinese province) even ordered residents to stop using mining equipment, saying that it could be confiscated by the government, adding that companies involved in illegal mining could be suspended. Well, as they say, the paper can handle a lot.
Let’s see how this ban has turned into reality
As we have already mentioned, the ban worked for some time, and all crypto activities in the country have stopped for several months. Most of the mining companies have moved to other countries. However, recent reports show that Chinese miners are rising again, and government bans are unlikely to bother them. If you think that only a few crazy daredevils can resist the Chinese government in this way, you are very wrong.
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In terms of hashrate, China ranked 2nd globally, and their share on mining operations reached a level of almost 22%. They rank right behind the US, which currently leads in these statistics with a 38% share of network activities. This suggests that the miners have found ways (especially the use of various VPN and proxy services) that help them hide their activities.
However, the CCAF (Cambridge Center for Alternative Finance), from which this information comes, did not dare to kick into the ecological side of cryptocurrency mining. They argued that China’s ban on cryptocurrency actually worsened the environmental footprint of bitcoin.
However, when we talk about using green energy, cryptocurrency mining is still probably one of the most advanced industries in the world. Therefore, we must also look at who is behind the funding for this study. In this case, there are “16 leading public and private institutions”, including the IMF (International Monetary Fund), Mastercard, Visa and the World Bank. There is probably no need to add more.
What does mining look like in other countries?
According to CCAF, the United States is currently in the first place, covering up to 37.84% of the hashrate. Miners’ activities are in a relatively significant uptrend, as evidenced by the increase in installed capacity from 42.74 EH/s in August 2021 to 70.97 EH/s in January 2022. Leading states here include Georgia (31%), Texas (11%), and Kentucky (11%), which together make up more than half of the country’s total hashrate. New York, California, North Carolina and Washington are also worth mentioning.
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As we already mentioned, China is in the second place in the ranking (21.11%), followed by Kazakhstan (13.22%). In Kazakhstan, however, despite the growth (September and October 2021 up to 27.31 EH/s), mining is affected mainly by frequent power outages and also by the weekly shutdown of the entire Internet earlier this year. Fourth is Canada (6.48%), where market share fell from 9.55% despite an increase in hashrate, as the network’s total hashrate grew faster. Russia is closing the top five (4.66%), which fell from third place and recorded a significant decrease in both monitored metrics (hashrate and market share).
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