Banned In China, The US Ready To Become A New Paradise For Bitcoin Miners

Mining bitcoin requires a fairly large fee. (photo: shutterstock)

JAKARTA - Long before the Chinese government banned bitcoin mining, in May 2021, the miners had actually left the country. New data from the University of Cambridge suggests the miners are likely heading to the United States.

The US is quickly becoming the new favorite country for bitcoin mining. The country is the second-largest mining destination on the planet. Nearly 17% of all the world's bitcoin miners as of April 2021 were in the US. That number increased 151% compared to September 2020.

“Over the past 18 months, we have experienced serious mining infrastructure growth in the US”, said Darin Feinstein, founder of Blockcap and Core Scientific. “We have seen a massive increase in mining operations looking to move to North America, mostly in the US”.

This dataset does not include the mass mining exodus out of China, which caused half of the world's miners to quit or go offline. Experts assess that the share of the US mining market is likely to be larger than the figures suggest.

According to newly released Cambridge data, just before China's mining ban began, the country accounted for 46% of the world's total hash rate, an industry term used to describe the collective computing power of the bitcoin network. That's a sharp decline of 75.5% in September 2019, and the percentage is likely much lower given the exodus now underway.

“500.000 rigs of Chinese miners were previously looking for a home in the US”, said Fred Thiel of Marathon Digital. “If they are deployed, that means North America will have nearly 40% of the global hash rate by the end of 2022”.

America's increasing dominance is a simple case. The US has been quietly building its hosting capacity over the years.

Before bitcoin miners actually started coming to America, companies across the country were making bets that eventually, if the adequate infrastructure was in place, they would set up shop in the US. The gamble seems to have paid off.

As bitcoin crashed in late 2017 and the broader market entered a multi-year crypto winter, there wasn't much demand for big bitcoin farms. US mining operators saw their opening and jumped at the opportunity to use cheap money to build a mining ecosystem in the United States.

“Big, publicly-traded miners are able to raise capital to make big purchases”, said Mike Colyer, CEO of digital currency firm Foundry, which helps bring more than USD 300 million worth of mining equipment to North America.

According to Colyer, companies like North American crypto mining operator Core Scientific are continuing to build hosting spaces throughout this crypto winter, so they have the capacity to install new equipment.

"Most of the new equipment produced from May 2020 to December 2020 was shipped to the US and Canada", he said.