Although it banned cryptocurrencies in 2021, China, which hosts more than 55% of the global hashrate, continues to have control over the Bitcoin mining network.
However, with Bitcoin mining gaining institutional legitimacy, especially in the US, American companies are rapidly closing the gap between China and the US.
The US now controls 40 per cent of the global hashrate due to a fundamental change in dynamics.
China’s Bitcoin Mining: Massive Growth as Ban Continues
According to Ki Young Ju, CEO of CryptoQuant, Chinese mining pools manage 55% of the global Bitcoin network. This is an extremely surprising rate, given that China has taken anti-crypto measures in recent years.
Chinese miners have found ways to operate despite government bans.
Before the ban in 2021, China provided more than 75% of the global hashrate and had a strong position in Bitcoin mining.
At the time, the Chinese government argued that the ban was necessary to maintain financial stability and prevent illegal activity.
As a result, many miners were forced to cease operations and some moved to more crypto-friendly regions such as the US and Kazakhstan.
However, Chinese miners have survived despite the difficulties. Miners have managed to retain a significant share of the global hashrate by turning to smaller, clandestine operations to avoid scrutiny.
As China plans to change its Anti-Money Laundering regulations in 2025, a change in the country’s attitude towards cryptocurrency regulations may be seen.
These changes are aimed to cover cryptocurrency transactions and reduce illegal activities related to digital assets.
US Bitcoin Companies on the Rise
Although China still hosts a large portion of the Bitcoin network’s hashrate, the US manages 40% of global mining activity.
The reasons for the growth of Bitcoin mining in the US include institutional investments and favourable regulations.
In the US, institutional interest in Bitcoin mining has increased. This rise is due to leading investors and companies wanting to capitalize on the sector’s profitability. Additionally, there is greater leniency on operations compared to China. Furthermore, the involvement of prominent politicians, such as former US President Donald Trump, has strengthened this trend.
For example, Trump expressed his support for the crypto mining sector. In June 2024, Trump met with company executives in Florida. During this meeting, he promised that the industry would receive fair treatment when he took office. While the U.S. has more dominance in Bitcoin mining, miners worldwide face significant challenges, especially in profitability.
Bitcoin mining revenue fell significantly in August 2024, recording the lowest revenue in a year. Total mining revenue reached $827.56 million in August. This corresponds to a decrease of more than 10.5 per cent compared to $927.35 million in June. Although mining revenue has fallen, it is still 5 per cent higher compared to the same period in 2023.
One of the reasons for the decline in mining revenue was the instability and volatility of the Bitcoin price.
Specifically, the price hovered around $56,000 throughout August during the market panic.
Although demand for Bitcoin remained high, the volatility in the BTC price and the decline in revenues caused miners to experience financial difficulties.
Despite the pressure miners felt, the shift in hashrate from China to the US allowed American companies to expand their operations. Moreover, they benefited from cheaper electricity and more lenient regulations.
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