Bitcoin mining has fully recovered from the Chinese crypto crackdown earlier this year, which effectively shut down more than half of the world’s miners overnight.
The recovery is assessed using hashrate, a word that refers to the total computer power of all bitcoin miners. China had long been the core of this business, with estimates showing that it accounted for 65 percent to 75 percent of global bitcoin mining. However, more than half of bitcoin’s hashrate disappeared from the global network after Beijing essentially banned the country’s cryptocurrency miners in May.
“Bitcoin weathered a nation-state onslaught of China officially forbidding mining, and the network shook it off,” said Kevin Zhang of digital currency firm Foundry, which assisted in the importation of over $400 million in mining equipment into North America.
Hashrate’s increasing trend may speak well for the world’s most popular cryptocurrency’s price, which has dropped 30% in the last month. According to bitcoin mining engineer Brandon Arvanaghi, who now operates Meow, a startup that facilitates corporate treasury participation in crypto markets, China’s ban was a clear “buy” signal, just as it was with Google and Facebook before it.
For years, companies in the United States have been quietly increasing their hosting capacity, betting that if appropriate infrastructure was in place, miners would come to the United States when the time was perfect.
There wasn’t much demand for large bitcoin farms when bitcoin plummeted in late 2017 and the larger market entered a multi-year crypto winter. The opportunity to deploy cheap money to build up the mining ecosystem in the United States was spotted by US mining companies, which leaped at the chance. Darin Feinstein, the founder of Core Scientific, feels that America’s mining infrastructure has grown significantly. “We’ve seen a significant increase in mining businesses trying to relocate to North America, primarily the United States,” he said.
Throughout the crypto winter, companies like Core Scientific continued to expand their hosting space to ensure the ability to plug in additional equipment. Many miners who didn’t have the financial means to relocate stayed in China, shifting their operations underground, according to multiple sources. Some others went “beyond the metre,” getting power straight from hydro dams in Sichuan’s southern province. Others broke up their mining operations into smaller farms scattered around the country, making them less visible to authorities.