Even though China imposed a ban on cryptocurrency mining in 2021, the country still plays a huge role in the global Bitcoin mining network. Currently, China controls a whopping 55% of the global hashrate, which is a measure of how much computational power is used to mine Bitcoin. Despite this, the U.S. is quickly closing the gap, with American mining firms now controlling 40% of the global hashrate.
This shift in mining dominance reflects significant changes in political, regulatory, and economic environments between China and the U.S.
Although China has taken aggressive measures against cryptocurrency, miners in the country have found ways to continue operating. Chinese mining pools still account for 55% of the global Bitcoin hashrate, according to Ki Young Ju, CEO of CryptoQuant. This comes as a surprise, considering China’s strict anti-crypto regulations.
Before the 2021 ban, China contributed over 75% of the global hashrate. The ban was intended to stabilize the financial system and curb illegal activity related to digital assets. As a result, many miners were forced to shut down or relocate to crypto-friendly countries like the U.S. and Kazakhstan. However, Chinese miners have proven resilient, operating smaller and more discreet mining setups to avoid government detection, allowing them to maintain a strong share in the global Bitcoin network.
China plans to update its Anti-Money Laundering (AML) regulations by 2025, which could further affect cryptocurrency mining. The updates are expected to include rules on cryptocurrency transactions, aiming to limit illegal activities related to digital currencies.
Related: Cryptocurrency regulations are changing across the globe
While China remains a significant player in Bitcoin mining, the U.S. is rapidly catching up. U.S. mining companies now control 40% of the global Bitcoin hashrate, driven by institutional investments and a favorable regulatory environment. Institutional investors are increasingly attracted to cryptocurrency mining due to its profitability and fewer restrictions compared to China.
In June 2024, former President Donald Trump expressed his support for the industry during a meeting with mining executives, promising fair treatment if he is re-elected. This political backing, combined with the growing legitimacy of cryptocurrency mining in the U.S., has contributed to the rise of American mining firms.
Related: Why The U.S. Should Focus On Bitcoin Mining Policy
Despite the growth of mining operations in the U.S., the global Bitcoin mining industry is facing challenges, especially around profitability. In August 2024, Bitcoin mining revenue dropped to $827.56 million, marking a 10.5% decline from July's revenue. Bitcoin prices hovered around $56,000 during the same period, causing uncertainty in the market.
The fluctuating Bitcoin prices and decreasing mining yields are putting financial pressure on miners worldwide. However, American mining firms have taken advantage of lower electricity costs and more favorable regulations, allowing them to expand operations even in the face of declining profits.
Related: How do fluctuations in cryptocurrency prices affect mining profitability?
The shift in Bitcoin mining dominance from China to the U.S. is creating new dynamics in the cryptocurrency world. Despite China’s ban, it still holds a large share of the global Bitcoin hashrate, while U.S. mining companies are quickly rising. As the crypto space evolves, the impact of political, regulatory, and economic factors will continue to shape the future of cryptocurrency mining.
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