U.S. defeats China as Bitcoin miner’s biggest destination

The United States is currently the largest destination for Bitcoin miners, surpassing China for the first time. It was already heading in that direction, but new data from the University of Cambridge, released earlier Wednesday, has made it official.

According to the Cambridge Center for Alternative Finance, as of July, 35.4% of Bitcoin’s hash rate (an industry term used to describe the collective computing power of miners) is in the United States. This is an increase of 428% from September 2020.

The United States is partially grateful to China for its new dominance in the mining industry.

Twelve months ago, China was a market leader in terms of hash rate. However, Beijing’s crypto crackdown in the spring has virtually taken half of the world’s Bitcoin miners offline overnight.

All at once, the miners fled China to the cheapest source of energy on the planet, known as “massive mining migration.” Many of them ended up in America.

The newly released Cambridge data will bring China’s average monthly share of global hash rates to zero in July. This is a major reversal from September 2020, when China won about 67% of the market.

“The entire story of China’s domination of Bitcoin has been completely destroyed,” said Boaz Sobrad, a London-based fintech data analyst.

Head to America

The United States has checked a number of boxes for immigrant Bitcoin miners looking for a new home.

For one thing, states like Texas boast some of the lowest energy prices in the world. This is a major incentive for miners competing in low-margin industries where variable costs are usually energy only.

The United States is also full of renewable energy sources.

Washington is a mecca for hydroelectric mining farms. New York produces more hydropower than any other state east of the Rocky Mountains and counts nuclear power plants towards a 100% carbon-free electricity target. Meanwhile, Texas’ share of renewable energy has increased over time, with 20% of its electricity coming from wind as of 2019. Texas Grid also continues to add wind and solar power rapidly.

Miners all over the country also use nuclear power. Some have otherwise fixed their rigs to the energy left behind, such as wasting natural gas in oil fields throughout Texas. This will reduce greenhouse gas emissions and generate money for gas providers and miners.

This shift to zero-emission clean energy sources has already begun to reshape the story among skeptics that Bitcoin is bad for the environment.

“The mining industry is price sensitive and the lowest cost electricity tends to be renewable in order to find the lowest cost electricity, because if you are burning fossil fuels, there are costs of extraction, refining and transportation. “Brockstream CEO Adam Back said.

In addition to reducing electricity costs, some US states, such as Texas, also have the right supply of crypto-friendly policy makers and hosting infrastructure.

The state has a deregulated power grid with real-time spot pricing that customers can choose from power providers, and decisively its political leaders favor cryptocurrencies. These are dream conditions for miners who want a kind welcome and cheap energy sources.

“If you’re trying to move hundreds of millions of dollars of miners from China, you want to ensure geographical, political, and jurisdiction stability, and make sure that your assets have private property protection. You Has moved. ” Core Scientific co-founder Darin Feinstein said.

Luck meets preparation

The rise to the top of America is also the case for preparing for a luck conference. The United States has quietly increased its hosting capabilities for years.

Before Bitcoin miners came to the United States, companies across the country gambled. It will eventually set up a shop in the United States if the infrastructure is in place.

The gambling is rewarding.

When Bitcoin crashed in late 2017 and the wider market entered the multi-year cryptocurrency winter, there was not much demand for large Bitcoin farms. Seeing their opening, US miners jumped at the opportunity to deploy cheap money to build the US mining ecosystem.

“Large listed miners were able to raise money to make large purchases,” said Foundry, a digital currency company that helped bring more than $ 300 million in mining equipment to North America. CEO Mike Colyer said.

In the last 18 months, the mining infrastructure has grown significantly in the United States, according to Feinstein. “We have noticed a significant increase in mining operations in North America, primarily in the United States,” Feinstein continues.

According to Collier, companies like North American crypto mining operator Core Scientific continued to build hosting space throughout the crypto winter to ensure the ability to connect new gear. ..

“Most of the new equipment manufactured between May 2020 and December 2020 was shipped to the United States and Canada,” he said.

Alex Brammer of Luxor Mining, a cryptocurrency pool built for advanced miners, points out that mature capital markets and financial instruments around the mining industry also played a major role in the rapid rise of the industry in the United States. After securing financing with profitability and multi-year track record of existing capital as collateral, it will begin to expand rapidly.

Covid also played a role.

A pandemic closed a large area of ​​the economy, but subsequent payments for stimulus benefits benefited US mining companies.

“Printing all the money during the pandemic meant that we needed to develop more capital,” explained Bitcoin mining engineer Brandon Alvanagi.

“People were looking for a place to deposit cash. The desire for large-scale investment has grown more than ever. Many may have found a way to a Bitcoin mining business outside of China. There is sex, “Continued Arvanaghi.

Next is Kazakhstan

However, not all miners are heading for renewable destinations.

Kazakhstan is slightly behind the United States in terms of its share of the global Bitcoin mining market, accounting for 18.1% of all cryptocurrency mining. There are coal mines here that not only provide cheap and abundant energy, but also provide sufficient carbon dioxide emissions.

However, some mining experts have told CNBC that Kazakhstan, which borders China, is only a temporary stopover for longer migrations to the west.

Brammer sees large miners go there in the short term with older generation equipment. “But as older generation machines reach the end of their useful life, they are likely to deploy new machines in more stable, energy-efficient and renewable jurisdictions,” he said.

Also likely to undermine Kazakhstan’s popularity is a new law signed by the President from 2022, which will introduce additional taxes on crypto miners.

“This will significantly change the incentives for people to invest in Kazakhstan,” Brammer said.

U.S. defeats China as Bitcoin miner’s biggest destination

Source link U.S. defeats China as Bitcoin miner’s biggest destination

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