By Nathalie Voit
The U.S. officially surpassed China as the top global bitcoin mining destination. The news comes as major mining companies based in China and Singapore have shifted operations to the U.S. following a crackdown on cryptocurrency by the Chinese government over the summer. The U.S.’s newfound status as the world’s premier bitcoin mining hub was confirmed by official University of Cambridge data released Oct. 19.
Following China’s ban on digital currencies and all crypto-related business transactions in late September, Asian companies with former mining operations in the mainland are forging partnerships with blockchain and cryptocurrency infrastructure providers based in the U.S. According to Bitcoin Magazine, Singapore-based Atlas Mining recently announced a partnership with Minnesota-headquartered Compute North, a multi-purpose data technology and mining provider.
The partnership arrives as a series of global supply-chain disruptions delay production, forcing mining operators to negotiate new infrastructure space with bitcoin-friendly colocation providers. Although the U.S. was already nearing China as the premier destination for bitcoin miners, the Chinese government’s crackdown on digital currency accelerated the trend.
Twelve months ago, the People’s Republic of China was considered the dominant player in the bitcoin mining industry. Beijing’s renewed crypto crackdown this summer sent China’s global hash rate share practically to zero overnight from its all-time high in September of 2020 when China controlled two-thirds of the world’s total hash rate (a cryptocurrency hash rate or hash power is an industry term referring to the total computational power of the bitcoin network).
“The whole narrative of China controls bitcoin is now completely destroyed,” said Boaz Sobrado, a London-based fintech data analyst.
With the Chinese ban on crypto intact, the U.S. has surpassed China as the number one destination for bitcoin mining. According to Cambridge University data, the U.S. captured around one-third of bitcoin’s hash rate in July, an increase of 428% from September 2020.
Migrant bitcoin miners are heading to crypto-friendly states like Texas, which is ripe with low energy prices. Others are fleeing to Washington state, a magnet for hydro-powered mining farms. Still, others are moving to places like Kentucky and Wyoming, where energy prices retail for less than half what you would pay in California and Connecticut, according to the Global Energy Institute, which maps out annual U.S. electricity prices with information from the U.S. Energy Administration.
Prospective miners are also enticed by crypto-friendly policies and states boasting a sufficient supply of hosting infrastructure, according to CNBC. Places like Texas are a haven for miners with their mix of deregulated power grids, low electricity costs, and pro-crypto policymakers.
“If you’re looking to relocate hundreds of millions of dollars of miners out of China, you want to make sure you have geographic, political, and jurisdictional stability. You also want to make sure there are private property rights protections for the assets that you are relocating,” said Darin Feinstein, co-founder of Core Scientific.
