The US Takes Over China's Position As The Country With The Highest Hash Rate In The World

The US is now the country with the largest bitcoin mining in the world. (photo: doc. unsplash)

JAKARTA - The United States has overtaken China as the country that accounts for the largest share of the world's bitcoin mining. Data published on Wednesday 13 October by the UK's Cambridge Center for Alternative Finance shows this.

The figures show the impact of a crackdown on bitcoin trading and mining launched by the State Council, or China's cabinet, in late May, which devastated the industry and caused miners to "close shop" or move abroad.

The data also showed China's share of computer power connected to the global bitcoin network, known as the "hash rate", had fallen to zero in July from 44% in May, and as much as 75% in 2019.

Miners elsewhere have picked up the slack, with mining rig manufacturers turning their attention to North America and Central Asia and larger Chinese miners also moving in, although the process is fraught with logistical difficulties.

As a result, the United States now accounts for the largest share of mining, about 35.4% of the global hash rate at the end of August. The data also shows Kazakhstan and Russia next in line.

Bitcoins are created or "mined" by high-powered computers, usually in data centers around the world, competing to solve complex mathematical puzzles in an electricity-intensive process.

Russia's low energy costs and cool climate have allowed some companies to use excess electricity to profit from a surge in bitcoin prices earlier this year, but concerns are growing illegal mining.

In a letter to the government in Moscow in late September, Igor Kobzev, governor of Russia's Irkutsk region, pointed to the "avalanche-like growth" of energy tariffs, blaming underground cryptocurrency mining.

"(The situation) is further exacerbated by the mining ban imposed by the Chinese authorities and the relocation of a large amount of equipment to the Irkutsk region," Kobzev said in the letter, according to the daily report Vedomosti, Wednesday 13 October.

Authorities elsewhere are more tolerant or even welcoming of bitcoin mining, while Chinese authorities announced stricter rules for bitcoin mining and trading last month.

"Our focus right now is on accelerating the development of suitable mining farms in North America and Europe," a representative for mining rig maker Ebang International Holdings told Reuters after the latest crackdown. But these industry players remain bruised.

“As a veteran who witnessed the birth of the industry in China, I find the situation today deplorable,” said Mao Shihang, founder of F2Pool, once the world's largest bitcoin mining pool, and co-founder of Cobo, a crypto asset headquartered in Singapore.

"China is losing its share of computing power ... the industry's center of gravity is shifting to the United States," he said, speaking before the Cambridge data was published.