Bitcoin mining has fully recovered since the Chinese government’s crackdown on all crypto mining activities earlier this year, which effectively shut down more than half of the world’s miners overnight. Before the crackdown, China accounted for about 75 percent of the ‘average monthly hashrate share’, a phrase used to calculate the computational power required to mine Bitcoin. Data now shows that the network’s hashrate is up about 113 percent in the last five months, successfully reversing the massive dip seen after China-based miners were forced to cease operations completely or relocate to other countries.
As per a CNBC report, hashrate, which refers to the cumulative number of terahashes per second (TH/s), peaked at around 180 million TH/s on May 14, but dropped to 86 million TH/s by July 4. However, as of last week, numbers were back to an average of 182.83 million TH/s. The ban caused miners to move their equipment to other countries, such as Russia and the US. In Kazakhstan, a country geographically not too far from China, this even led to a series of power shortages due to Bitcoin mining requiring large amounts of electricity. The country is preparing to build a new nuclear power plant in order to deal with this problem.
“Bitcoin withstood a nation-state attack of China actually banning mining, and the network shrugged it off,” said Kevin Zhang, Vice President Of Business Development at popular crypto mining firm Foundry while speaking to CNBC.
“The bitcoin network withstood an attack by a major superpower and emerged stronger than ever six short months later. How can anyone ever argue, ‘But what if nations ban it?’ again?” he said.
According to Zhang, such a speedy recovery became possible since the US made sure to lay the foundation for mining to prosper there. “There is a huge appetite for growth, building infrastructure, and leveraging stranded power,” he said.
Cryptocurrency mining gobbles up vast amounts of power, both through the electricity consumed by the specialised computer equipment needed to solve the mathematical puzzles that produce the currency and through the energy needed to cool the machines and prevent them from overheating.
As China works to implement its pledge to create a low-carbon economy and reach peak carbon emissions by 2030, it has stepped up efforts to clamp down on crypto mining and trading since May this year.
China’s top economic planning agency recently provided details about how it plans to root out cryptocurrency mining, saying that the next phase of the crackdown will focus on industrial-scale mines and state-owned entities’ involvement. Authorities will also prioritise the elimination of Bitcoin mining, in particular, Meng Wei, a spokesperson for the National Development and Reform Commission (NDRC), told media sources.
In addition, the NDRC will also force crypto mining projects that currently pay residential electricity prices to pay higher rates as a punishment, Meng said, after being asked about what the NDRC’s next steps will be in its crackdown on the industry.