Posted on

New Data Shows China Still Controls 21% Of The Global Bitcoin Mining Hashrate

China is back with a vengeance. The Cambridge Centre for Alternative Finance, or CCAF, collected data “spanning the period from September 2021 to January 2022” for their latest study. The headline is that, ban or no ban, the Asian country controls 21% of the Global Bitcoin mining hashrate. Since June 2021, here in NewsBTC, we’ve been wracking our brains trying to figure out why did China ban bitcoin mining. Maybe we were barking at the wrong tree the whole time. 

According to the CCAF’s numbers, unsurprisingly the “US has remained at the forefront of Bitcoin mining and extended its leading position (37.84%).” For their part, “China has re-emerged as a major mining hub (21.11%). Kazakhstan (13.22%), Canada (6.48%), and Russia (4.66%) have been relegated to more distant places.” Let’s see what else can we learn from the CCAF’s numbers.

Is China All The Way Back? How Did This Happen? 

As it turns out, the CCAF analysis uncovered numbers that “strongly suggest that significant underground mining activity has formed in the country”. Can we be sure that the explanation is real? And if it is, how did the underground China bitcoin mining industry surge so fast?

“Following the government ban in June 2021, reported hashrate for the entire country effectively plummeted to zero during the months of July and August. Yet reported hashrate suddenly surged back to 30.47 EH/s in September 2021, instantly catapulting China to second place globally in terms of installed mining capacity (22.29% of total market).”

The report wonders what happened, “a comeback of this magnitude within the period of one month would seem unlikely given physical constraints, as it takes time to find existing or build new non-traceable hosting facilities at that scale”. And theorizes that maybe the underground miners were using VPNs to hide their location and then, suddenly, decided that they were safe enough to stop hiding. Which seems unlikely.

BTC price chart for 05/18/2022 on Bitfinex | Source: BTC/USD on TradingView.com
Non-China Countries

Sadly but predictably, the study also found out that “the hashrate recovery has not been distributed evenly”. How did the non-China countries in the Top 5 do?

  • The United States “surpassed the rest of the world in terms of hashrate growth. This is evidenced by installed capacity surging from 42.74 EH/s (35.40%) in August 2021 to 70.97 EH/s (37.84%) in January 2022.”
  • In Kazakhstan, for their part, “Total hashrate continued to increase in September and peaked at 27.31 EH/s in October, until repeated power outages towards the end of last year, and a week-long internet shutdown earlier this year, forced miners to temporarily suspend operations.”
  • Surprisingly, “Russia on the other hand not only experienced a substantial drop in relative hashrate share from 11.23% in August 2021 to 4.66% in January 2022, but also a significant decline in total installed mining capacity contribution from 13.56 EH/s to 8.74 EH/s over the same period.”
  • Last but not least, “Canada experienced only a moderate increase in its hashrate from 11.54 EH/s in August 2021 to 12.15 EH/s in January 2022, which resulted in a loss in market share from 9.55% to 6.48% as total network hashrate was growing significantly faster. ”

The CCAF Spreads FUD

Of course, the Cambridge Centre for Alternative Finance couldn’t pass the opportunity to spread some unfounded rumors about bitcoin mining. This is what the CCAF said: 

“These geographic shifts in mining activities bring to the fore how relocations impact the overall sustainability of the network. For instance, recent research has suggested that the Chinese decision to ban Bitcoin mining has indeed worsened – rather than improved – Bitcoin’s environmental footprint.”

The CCAF is using this study’s findings, which basically says that they NOW believe what bitcoiners always said. That China was mostly using hydropower energy for bitcoin mining, and not coal. The fact is, as far as using green energy goes, bitcoin mining continues to be the cleanest industry in the world. 

Whenever we find intentional FUD spreading like this one right here, we have to check out who paid for the study. As it turns out, the numbers come directly from the Cambridge Digital Assets Programme. The CCAF host the CDAP “in collaboration with 16 prominent public and private institutions”. Among them, we find the International Monetary Fund (IMF), Mastercard, Visa, and the World Bank.

And right then, everything made sense.

Featured Image by PublicDomainPictures from Pixabay | Chart by TradingView

Posted on

Malice Or Ignorance? The New York Times Keeps Printing Lies About Bitcoin Mining

The New York Times’ campaign against bitcoin rages on. Even though this time they had the perfect opportunity to write a balanced article, they didn’t. The author reports one positive bitcoin mining story after another, while keeping a snooty attitude and suggesting it’s all a PR move. The title summarizes the New York Times’ stance, “Bitcoin Miners Want to Recast Themselves as Eco-Friendly.”

Related Reading | Valkyrie Bitcoin Mining ETF “WGMI” Approved For Nasdaq Listing

Before we get into it, a quick story. The foremost expert in bitcoin’s energy consumption, Nic Carter, published an exhaustive report on mining. Among other things, it contained hard data that showed to what extent China was mining using hydropower energy. Mainstream media largely ignored it. The party line was that we couldn’t trust China’s statistics. And, that China was probably burning cole. 

Fast forward to last month. China banned bitcoin mining a while ago and bitcoin’s hashrate relocated, recovered, while the network functioned perfectly throughout. Most of China’s mining industry relocated to green energy-abundant countries. What did the New York Times post? An article called “China Banished Cryptocurrencies. Now, ‘Mining’ Is Even Dirtier,” that claims that Chinese miners were using hydropower energy and thus used cleaner energy.

That’s the level of propaganda we’re dealing with.

What Did The New York Times Say About Bitcoin Mining This Time?

The article starts by featuring Argo Blockchain, the company is building a new facility that “would be fueled mostly by wind and solar energy.” They even quote Peter Wall, Argo CEO, saying. “This is Bitcoin mining nirvana. You look off into the distance and you’ve got your renewable power.” What could be wrong with that?

Two paragraphs later, the New York Times starts pushing lies and embarrassing numbers: 

“A single Bitcoin transaction now requires more than 2,000 kilowatt-hours of electricity, or enough energy to power the average American household for 73 days, researchers estimate.”

Of course, those ridiculous claims come from Digiconomist, a widely debunked researcher who happens to be an employee of the Dutch Central Bank. And then, they blatantly quote the malicious study mentioned in the intro. 

“The Bitcoin network’s use of green energy sources also dropped to an average of 25 percent in August 2021 from 42 percent in 2020. (The industry has argued that its average renewable use is closer to 60 percent.) That’s partly a result of China’s crackdown, which cut off a source of cheap hydropower.”

And quote Alex de Vries, one of the study’s authors, being completely off the mark. “What a miner is going to do if they want to maximize the profit is put their machine wherever it can run the entire day.” WHAT? To maximize profit, a miner is going to find the cheapest source of energy possible. Energy is their biggest cost. The cheapest source possible is energy that’s currently being wasted. That’s the situation.

BTC price chart for 03/26/2022 on Forex.com | Source: BTC/USD on TradingView.com
More Feel-Good Stories Framed As Bad News

The New York Times even quotes Paul Prager, TeraWulf CEO, saying “Everyone I talk to now is talking about carbon neutrality. The language has absolutely changed.” And then, the newspaper spreads the good news.

“TeraWulf, has pledged to run cryptocurrency mines using more than 90 percent zero-carbon energy. It has two projects in the works — a retired coal plant in upstate New York fueled by hydropower, and a nuclear-powered facility in Pennsylvania.”

None of these stories are celebrated. Remember the article’s title, they are cynically presented as PR stunts. Then, it´s time for Sangha Systems, who “repurposed an old steel mill in the town of Hennepin. Sangha is run by a former lawyer, Spencer Marr, who says he founded the company to promote clean energy. But about half the Hennepin operation’s power comes from fossil fuels.”

The New York Times Closes The Loop

That’s the worst example that the New York Times could find. A person who “founded the company to promote clean energy” but had to make a compromise to start his business. To close the article, the author brings us back to Argo Blockchain and tries to pull something similar. Apparently, the CEO “can’t guarantee that Argo’s new center will have no carbon footprint. That would require bypassing the grid and buying energy directly from a renewable power company.”

Related Reading | Biden Loves Intel’s Plan To Produce Semiconductors. What About Bitcoin Mining?

And then, they quote him again. “A lot of those renewable energy producers are still a little bit skeptical of cryptocurrency. The crypto miners don’t have the credit profiles to sign 10- or 15-year deals.”

So, Argo is really trying but it’s not possible at the moment for understandable reasons. And the whole industry is moving to a greener path because the incentives are aligned that way. Got it, New York Times. Got it.

Featured Image by tacskooo on Pixabay | Charts by TradingView

Posted on

Bitcoin Mining More Damaging To The Environment After China Ban, Study Says

The China bitcoin mining ban that took place mid-last year was no doubt a heavy blow to the space. It saw the hash rate from the region which was once termed the mining capital of the world crumble to almost zero as miners had to shut down their operations. The reason for this from the Chinese government boiled down to concerns about electricity consumption and environmental impact.

As the miners exited China, they had to set up business elsewhere and procure electricity for their mining farms, which can be quite energy-intensive. According to a new report, these new energy sources have been mainly from non-renewable sources compared to what the miners used in China. This means that the energy impact of bitcoin mining has gone up in recent months.

Bitcoin Mining Carbon Footprint Now Worse

It has been less than a year since China placed a ban on bitcoin mining and the effects are already being felt energy-wise. The general school of thought following the ban had been that miners would focus on more renewable energy sources so as to avoid a repeat of the issues in the region. However, a new study has shown that this is not so. Rather, the environmental impact of bitcoin mining has only gotten worse.

Related Reading | TA: Why Bitcoin Must Close Above $40K For Trend Reversal

China is a country known for its wide use of hydropower, a renewable energy source, and the miners in the country had used a significant amount of renewable energy for their operations. Even then, the carbon footprint of mining activities was still enough to cause a stink. The Joule journal has revealed that miners have not necessarily increased their renewable energy consumption.

BTC trading above $38,000 | Source: BTCUSD on TradingView.com

The study shows that the amount of renewable energy used by bitcoin miners has fallen since the ban. At its peak, this number had reached as high as 42% in August. But since then, barely seven months after, renewable energy use in mining has fallen to as low as 25%.

Related Reading | Bitcoin Staggers After Putin’s Nuclear Deterrence Alert Warning

Bitcoin mining continues to produce significant amounts of carbon dioxide yearly. With over 65 megatons of carbon dioxide produced annually, bitcoin mining is less green than ever. For comparison, the entire country of Greece reportedly produced less than 57 megatons of carbon dioxide in 2019. This means that miners are producing more CO2 than entire countries.

A lot of the miners that left China have now moved to countries where energy sources are largely produced by burins “hard coal” which produces more pollution. This new study shows that mining is less favorable to the environment now. Its carbon intensity has already grown by 17%.

Featured image from Bloomberg, chart from TradingView.com

Posted on

Fidelity Says What We’ve Been Thinking: Countries & Central Banks Will Buy BTC

Surprising the world, Fidelity predicts what Bitcoin’s game theory implies. It’s as Satoshi Nakamoto said, “It might make sense just to get some in case it catches on.” That’s the exact same conclusion that Fidelity reaches in its “Research Round-Up: 2021 Trends And Their Potential Future Impact” report. Take into account that Fidelity is a multinational financial services corporation, it doesn’t get more mainstream than this.

I agree with @Fidelity, of course, but still astonishing to read this on Bitcoin adoption game theory in such a mainstream financial report: pic.twitter.com/7zRO9rEele

— Alex Gladstein 🌋 ⚡ (@gladstein) January 13, 2022

What did Fidelity say about Bitcoin adoption at the nation-states and central bank level? 

They put it very clearly:

“We also think there is very high stakes game theory at play here, whereby if bitcoin adoption increases, the countries that secure some bitcoin today will be better off competitively than their peers. Therefore, even if other countries do not believe in the investment thesis or adoption of bitcoin, they will be forced to acquire some as a form of insurance. In other words, a small cost can be paid today as a hedge compared to a potentially much larger cost years in the future.” 

In other words, It might make sense just to get some in case it catches on. And, as Stacy Herbert said, “First mover advantage goes to El Salvador”. At least if we’re talking out in the open, because other countries might be accumulating Bitcoin on the down-low. For example, Venezuela seized a lot of ASICs from private miners. Chances are those are active in a warehouse somewhere. And, of course, there are rumors that the USA is already mining.

Fidelity is one of the biggest asset managers in the world

They see what ID-10ts fail to understand

First mover advantage goes to 🇸🇻

Game over for fiat, game on for #bitcoin

🌋🇸🇻 pic.twitter.com/I0Jlp8baVY

— Stacy Herbert 🇸🇻 (@stacyherbert) January 13, 2022

In any case, what does Fidelity conclude?

“We therefore wouldn’t be surprised to see other sovereign nation states acquire bitcoin in 2022 and perhaps even see a central bank make an acquisition.”

If those players do it in the open, it will probably trigger a race like no other. A race in which it will be too risky not to participate. 

Speaking About Bitcoin Mining…

Fidelity’s report summarized 2021, it goes through most of the major stories that NewsBTC has covered ad nauseam. The company doesn’t try to figure out why did China ban Bitcoin mining, but it highlights how fast the hashrate recovered. 

“The recovery in hash rate this year was truly astounding and one that we think demonstrates several issues that will be important to keep in mind for 2022 and beyond.”

The Fidelity report also highlighted how well the network responded. “This has now been tested and bitcoin’s network performed perfectly.”

BTC price chart for 01/17/2022 on Eightcap | Source: BTC/USD on TradingView.com
What Does Fidelity Say About The Ecosystem In General?

The report wasn’t exclusively about Bitcoin, they also identified the biggest trends in the wide crypto sphere.

“The biggest non-Bitcoin themes put on display this past year included the massive issuance of stablecoins, the maturation of decentralized finance, and the early days of non-fungible tokens.”

And about those trends, Fidelity predicted:

  • “The growth in interconnectivity between siloed blockchains”

  • “Traditional fintech companies partnering or building capabilities to interact with DeFi protocols”

  • “The dawn of decentralized algorithmic stablecoins has officially begun.” Responding to the “growth in demand for more regulated, centralized stablecoins.”

  • “While the long-term value of these NFTs is not known, the impact of increased digital property rights for art, music, and content is likely to be meaningful in some form.”

In general, Fidelity thinks that investment in digital assets will keep growing:

“Allocating to digital assets has become far more normalized over the past two years for all investors. The Fidelity Digital Assets 2021 Institutional Investor Survey found that 71% of U.S. and European institutional investors surveyed intend to allocate to digital assets in the future. This number has grown across each individual region of the survey for the past three years, and we expect 2022 to show another year of higher current and future asset allocations to digital assets amongst institutions.” 

However, something has to happen to catalyze widespread institutional adoption. “The key to allowing traditional allocators to continue to pour capital into the digital asset ecosystem revolves around regulatory clarity and accessibility.”

Is 2022 the year of regulatory clarity? What will happen first, institutional adoption of cryptocurrencies or nation-states adoption of Bitcoin? What central bank will earn first-mover advantage? Burning questions for the year ahead.

Featured Image by Damir Spanic on Unsplash | Charts by TradingView

Posted on

China Warns State-Owned Companies To Stop Bitcoin Mining Or Risk Strict Penalties

China has issued a warning to its state-owned enterprises to stop cryptocurrency mining. It also warned that it would increase electricity rates for companies that continue to defy the ban.

This latest warning comes amid the ongoing crypto ban in the East Asian country. Some months ago, the government of China declared all crypto trading activity illegal. Subsequently, crypto miners and exchanges like Huobi and Binance began to relocate to countries with crypto-friendly regulations.

Related Reading | Is This The Reason China Banned Bitcoin Mining? Carvalho’s Mind Blowing Theory

However, despite the crackdown on crypto, Chinese residents continue to trade Bitcoin. And Beijing authorities are not relenting in their efforts to find ways to prevent crypto use. The Chinese government has also blamed miners for the country’s high energy consumption. In May, during the heat of the crackdown, many large crypto mining farms relocated or stopped operating. Still, some small mining rigs continued to operate.

Last month, Beijing authorities started tracking the IP address of citizens to check for crypto mining activities. Additionally, authorities in Zhejiang province also reportedly began investigating government employees who were illegally mining Bitcoin.

Related Reading | Amid China’s Crypto Crackdown, These Three Places Offer Refuge to Displaced Miners

Despite all these measures, there has not been a significant reduction in energy consumption. This has led officials to intensify their efforts and face state-owned entities.

Authorities Crackdown On Industrial-Scale Bitcoin Mining

According to reports, the National Development and Reform Commission (NDRC) plans to clamp down on industrial-scale bitcoin mining. And by extension, all state companies that participate in such activity. A spokeswoman for the country’s chief economic planner, Meng Wei, said this at a press conference on Tuesday.

She also emphasized the unsustainable nature of crypto mining, stating that it consumes lots of energy and produces lots of carbon emissions.

BTC trading at $60.6K | Source: BTCUSD on TradingView.com

Last week, the NDRC held a special meeting to discuss the crypto ban defiance. And also urged provinces and municipalities to investigate and deal with State-owned enterprises involved in mining.

China Dismisses Government Official For Mining

Beijing continues to reinforce its stance on crypto by going after even government officials. A few days ago, China removed a former Jiangxi government official from his position.

Xiao Yi, a former vice-chairman of the Jiangxi Provincial Committee of the Chinese People’s Political Consultative Conference, was accused of abusing his power to promote and support enterprises against government policies. He engaged in crypto mining and also took bribes, according to the Central Commission for Discipline Inspection.

Xiao is the most senior Chinese official to be punished for his involvement in cryptocurrency mining.

Featured image by Euronews, Chart from TradingView.com

Posted on

Since China’s Mining Ban, Bitcoin Hashrate Has Recovered by 68% And Counting

Bitcoin is a perpetual motion machine. The Bitcoin hashrate is slowly climbing to pre-China-ban levels, and the service continued uninterrupted without a hiccup. Such is the power of well-placed incentives. Pantera Capital’s CEO Dan Morehead adds one more factor to the equation. “The bitcoin network has recovered 68% of the drop in hashrate that our difficulty model attributed to China’s ban—likely in places with cleaner energy.”

The recovery is happening exactly as forecast.

The #bitcoin network has recovered 68% of the drop in hashrate that our difficulty model attributed to China's ban—likely in places with cleaner energy.

The transition to renewables is underway.

Sep Letter: https://t.co/xLyaLpPQQN pic.twitter.com/UsK9ML3BU8

— Dan Morehead (@dan_pantera) September 9, 2021

In the company’s newsletter, Pantera fleshes out the argument:

“Although difficult to know with certainty, it seems very likely that much of the reboot in mining power is occurring in places with cleaner energy than those utilized by Chinese miners. 

The transition to renewables is well underway.”

Regarding The Bitcoin Hashrate, Are ESG Concerns Even Important?

Here at NewsBTC we’ve determined that China’s Bitcoin mining tended to go to provinces with abundant green energy. Bitcoin incentivizes that. The Bitcoin hashrate tends to go where the energy is cheap. We’ve also determined that the environment doesn’t seem to be the reason for the Bitcoin mining ban.

“The fact that the electricity for crypto mining in Sichuan came from clean hydropower meant that many thought the province would be a safe haven for Bitcoin miners. As pressure on local governments to cut carbon emissions mounts, projects were successfully shuttered in some other provincial-level regions — such as Xinjiang and Inner Mongolia — where the mining was chiefly fueled by coal.” 

The only thing we can know for sure about the Chinese government’s plan is this: the environment is not on their radar. They’re closing these mining operations for other reasons altogether. 

It’s also important to remember that China’s Bitcoin hashrate dominance was already on decline before the mining ban. 

“According to Arcane Research, CBECI numbers say that:

China’s share of total Bitcoin mining power has declined from 75.5% in September 2019 to 46% in April 2021 — before the restrictions on Chinese miners were even imposed. That figure is much lower than the older estimate of 65%.

That’s a sharp decline. Why did China’s miners lose so much ground before the ban?”

None of this invalidates Pantera Capital’s original thesis, though. “The transition to renewables is well underway,” that certainly seems to be the case. And the Bitcoin hashrate keeps climbing. 

BTC price chart for 09/09/2021 on Timex | Source: BTC/USD on TradingView.com
Do Bitcoin Halvins Imply Cuts In Energy Consumption?

Another interesting idea present in the mentioned newsletter is this one:

“Bitcoin has a built-in mechanism to reduce energy consumption over time.  The number of bitcoin issued in the every-ten-minutes block reward is cut in half every four years.  Ceteris paribus, the amount of electricity Bitcoin consumes will be cut by 50% every four years.  For comparison, the Paris Accord only requires 7% cuts every four years.”

Of course, Bitcoin’s price fluctuates when related to fiat currencies. So, the value of every Bitcoin stays the same, but the price might – and usually does – increase more than twofold. Even though the miner’s rewards are cut in half, their earnings might increase. That extra money could bring even more competition and a Bitcoin hashrate increase with it. 

Taking that into account, Pantera poses:

“Perhaps a more realistic scenario is if the price of bitcoin were to double every four years in parallel with the halvings – putting bitcoin at $320,000 /BTC in 2032 – electricity consumption would be no greater than it is today.”

Enough About The Bitcoin Hashrate, What About The Price?

Another point that the newsletter makes is this one.“This is China’s third ban of Bitcoin.  The reverse hex is still working – the price is up 57%.”

Related Reading | New To Bitcoin? Learn To Trade Crypto With The NewsBTC Trading Course

Is this a bullish signal? Bitcoin’s price has “only” increased by 57% since the Chinese mining ban sent the Bitcoin hashrate in death spiral for a few seconds. Bitcoin paid the price and resisted sabotage like a hero. We’re not sure if a “reverse hex” could be considered reliable information, but… maybe this IS a bullish signal?

Featured Image by Diana Polekhina on Unsplash – Charts by TradingView and Pantera Capital