Bitcoin mining operations began shifting out of China even before country began crackdown earlier this year, while Kazakhstan and US see mining surge
China’s share of the world’s Bitcoin mining has plunged this year, with many mining operations apparently relocating to neighbouring Kazakhstan, according to new data from Cambridge University.
The shift began even before China’s crackdown on mining operations, which began in May, according to the Cambridge Centre for Alternative Finance.
China accounted for less than half (46 percent) of the power used in Bitcoin mining in April, a sharp decrease from 75.5 percent in September 2019, the centre found.
Meanwhile, Kazakhstan’s share of production rose from 1.4 percent to 8.2 percent in the same period.
The country now hosts the third-biggest share of Bitcoin mining after the US, which saw its own share rise from 4.1 percent to 16.8 percent.
Russia and Iran were respectively the fourth- and fifth-biggest countries for Bitcoin mining.
The CCAF was set up to estimate the total energy used in Bitcoin mining, where operators process transactions in exchange for an opportunity to produce new units of the cryptocurrency.
Bitcoin’s soaring prices over the past few years have made mining increasingly lucrative.
But the mining process is highly energy-intensive, and critics point out that in many cases the power involved comes from sources such as coal, which have a damaging effect on the environment.
China, where most Bitcoin mining still takes place, is heavily reliant on coal power.
The country began clamping down on mining operations in provinces including Sichuan, Xinjiang and Inner Mongolia earlier this year, helping to trigger a Bitcoin selloff.
Bitcoin miners can shift location on a seasonal basis to seek out lower energy prices, found Michel Rauchs, digital assets lead at the CCAF.
Rauchs created an index to monitor the usage of electricity by Bitcoin mining in 2019.
In the rainy season Chinese miners have often shifted to Sichuan, a privince in the southwest with abundand hydropower, he said.
Sichuan’s share of total Bitcoin mining power within China increased from 14.9 percent at the beginning of the rainy season to to 61.1 percent, Rauchs said, while Xinjiang’s share decreased from 55.1 percent to 9.6 percent in the same period.
Kazakhstan has more than 22 gigawatts of electric power capacity, most of which comes from coal and gas stations, according to Bloomberg.
In May Tesla said it would stop accepting Bitcoin payments for vehicle purchases due to environmental concerns around the cryptocurrency.
In June Tesla chief executive Elon Musk said on Twitter that the company would resume Bitcoin transactions once it confirms there is reasonable clean energy usage by miners.