(Last Updated on August 6, 2021)
China no longer controls over 50% of the hashrate on the Bitcoin network.
The FUD is cancelled.
No longer can anyone ask, “What if Chinese miners do a 51% attack on the blockchain!?”
It is surprising to see that China’s hashrate actually fell under 50% starting in March of 2021 based on the data at Statista.com. This has been due to the mounting legislative pressure from the Chinese Communist Party pushing crypto miners out of the country since late 2020. And this pressure has only continued to increase exponentially each month through 2021 and now is nearing completion.
All of the corporate hash power is gone from China.
Legal exodus complete.
Now we have experienced a full blown miner exodus from China in the past three months and nothing could be better for the community.
Win win for Bitcoiners throughout the globe.
By now it is abundantly clear that China has finished a massive legislation reckoning for Bitcoin and all other cryptocurrency miners within the country.
The Bitcoin Network is benefitting greatly from this exodus.
ASICs, new and old, are flooding out of the country by the hundreds of thousands. Many of which will find new homes with the original owners in different locations. While another percentage of machines will go to new owners and new locations completely.
ASICs or Application Specific Integrated Components are selling for top dollar as supplies leave China and are gobbled up quickly. This pressure is even higher with lacking market supply as the chip shortage is still affecting much of the computer component economy today.
Bitmain Antminers, MicroBT WhatsMiners, Innosillicon, Canaan, and other leading component manufacturers are seeing unparalleled corporate demand in the United States.
There is a lot of competition from perspective investors to long standing companies with so many of the large Chinese miners shipping off machines to various locations around the world. Many of them are relocating to geographically close locations such as Eastern Europe, Central Asia, and Russia which are in close proximity. But some have accepted large international corporate mergers and joined forces with other miners located in places like the U.S. So far the primary locations for relocating in the United States have been Texas, Wyoming, and Tennessee.
Results of China’s miner exodus?
-> China no longer controls greater than 50% of the Bitcoin network hashrate
-> Hashrate is more diversified through nation-states with varying degrees of governance and regulation
-> Network decentralization increases
-> Censorship resistance increases
-> Future supply of mined Bitcoin ownership diversity increases
Where will the majority of Chinese hashpower end up?
Pretty much anywhere is better than China outside of a few, tiny, dictatorships around the globe..
As long as 100% of it isn’t going straight to another authoritarian nation, then we should be greatly strengthening the blockchain through this diversification in miner locations and ownership.
Nothing enforces the decentralization and censorship resistant qualities of the blockchain more than diversity.
So seeing these ASICs and GPU rigs flooding out of the country is a huge win for the industry and network as a whole.
We know there have been a ton of deals between Chinese miners and other crypto companies looking to scoop up equipment or join forces and relocate. The miners can choose hundreds of cheap electricity locations around the globe that all offer various pros and cons based on regulations and government regimes.
A lot of the hashpower is coming to the United States
Bitmain, Blockcap, Argo Blockchain, and Great American Mining are all rumored to be moving to new mining facilities in Texas.
No doubt a solid % of Chinese miners are coming to the United States to mine in BTC friendly states like Texas, Wyoming, and Tennessee.
Yahoo Finance, Coindesk, Forbes, Bitcoin News, Bloomberg, Wall Street Journal, and all of the mainstream media outlets have been covering this for a few months. Due to recent regulatory clarity and tax based incentives we’ve seen major facilities being built in the most forward looking cryptocurrency states in America.
ASICs are pouring into the hands of American companies and Texas has been the recent hype spot. Wyoming is also pushing hard to attract future crypto business with low regulations and no income tax.
Article after article is popping out with new Chinese based miners coming to the U.S. with Texas being the focus of all the hype. By the end of the year expect to see at least a half dozen major mining companies popping up in the United States.
Why are Bitcoin miners flocking to states like Texas and Wyoming?
-> Massive Oil & Gas industry provides future opportunity like carbon scrubbing and energy recapture through Bitcoin mining
-> New Bitcoin friendly legislation that is clear on mining companies and incentivizes start-ups
-> Clear regulations that offer stability as the companies grow
America is ripe for opportunities related to carbon tax credits and environmental cleaning of energy waste. This is especially the case for natural gas and other large infrastructure energy systems in the United States where corporations may see increased taxation due to “wasted” energy or off gasses.
Waste energy recapture (commonly targeting natural gas in the U.S.) and/or carbon scrubbing unveils massive opportunity to leverage ASICs to lower environmental based taxation and increase asset holdings on the balance sheet.
Bitcoin machines can be used to scrub the wasted energy by recapturing it through some form of generator that powers ASICs.
Thus greatly reducing the final output of carbon emissions and waste.
Lower carbon taxes and earning Bitcoin as a new asset that can be held, sold, and will record gains/losses for tax season.
Many incentives for corporations to start leveraging in this industry.
With Marathon and others leading the way in the public sphere – we are certain to see new IPOs and SPACs involving the Bitcoin mining industry in 2022. Not only will we see our first Bitcoin ETF hit Wall Street in 2021 or 2022, it will be a year full of new mining and digital asset holding companies.
The financial industry is dying for new areas of growth and the way will be paved with all of the passing cryptocurrency focused legislation being passed at the state level and with Gary Gensler and the SEC.
Why would China want to lose their control and influence over this space?
It would seem that they would have more ability to assert some form of control over the Bitcoin economy and blockchain by having as much hashrate within the country as possible.
Clearly the People’s Party could “assume” ownership over these in-country mining operations at anytime.
Why lose all of that equipment and hashrate?
They’ll still allow manufacture, production, and sales of mining ASIC devices, but will give up all influence over the blockchain through hashrate.
Failing infrastructure and lost hydropower could be a small reason as the primary cities are hydropower locations. The largest Chinese Bitcoin mining capital cities were – Xinjiang, Inner Mongolia, Sichuan and Yunnan. Primarily used for their extremely cheap hydropower during the rainy seasons.
But let’s be honest – we know the Chinese Communist Party sees Bitcoin as a threat to national security power and economic control.
At this point those cities are 99% depleted of ASICs and related mining equipment they are ghost towns for crypto. Many Chinese employees have lost work and companies have been destroyed through this exodus.
Only time will tell how it will fare for China the loss of the industry. It will probably be “ok” for their government, but just one more blow to their people..