China Underground Mining Operation

Market Meditations | May 19, 2022

You may remember last year when China imposed a crypto ban back in May. There was a lot of speculation as to what country would take over since China was the biggest crypto mining hub in the world. Recent data suggests, though, that China is still one of the leading countries when it comes to mining bitcoin (only second to the U.S).

  • According to data from the Cambridge Centre for Alternative Finance (CCAF), China has re-emerged as a major bitcoin mining hub.
  • From September 2021 to January 2022, traffic from China accounted for roughly 20% of bitcoin’s total hash rate.
  • This uptick in activity comes after the number fell to roughly 0% in August following the bitcoin ban in China.
  • This means that after showing no activity in August, they likely moved operations underground and were back up and running by September.
  • Miners most likely have access to off-grid electricity and have small-scale operations that do not raise red flags to the authorities.
  • The CCAF said, “It is probable that a non-trivial share of Chinese miners quickly adapted to the new circumstances and continued operating covertly while hiding their tracks using foreign proxy services to deflect attention and scrutiny

More than anything, this goes to show that cryptocurrency can have the ability to stretch beyond a government’s reach.