Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Mahi Sall is the CEO & Founder of FinXpair, a Berlin-based strategic advisory boutique firm focu[...]
Bitcoin Electricity Consumption Index (CBECI): China’s crackdown puts US in pole position and Canada in 4th
Cambridge Centre for Alternative Finance | Michel Rauchs | Oct 13, 2021
Source: Bitcoin Electricity Consumption Index (CCAF)
The latest update to the Cambridge Bitcoin Electricity Consumption Index (CBECI) has confirmed the impact of the Bitcoin mining crackdown in China, showing that the leading share of global Bitcoin network hashrate now sits in the US, followed by Kazakhstan and the Russian Federation.
See: How This Billionaire-Backed Crypto Startup Gets Paid To Not Mine Bitcoin
This new data (to the end of August 2021) shows the US with a global hashrate share of 35.4% (up from 16.8% at the end of April), Kazakhstan with 18.1% (up from 8.2%) and the Russian Federation with 11% (up from 6.8%). This confirms the hashrate trajectory identified in the last update (to end April 2021) which showed those three countries were already gaining market share prior to the crackdown in China.
The immediate effect of the government-mandated ban on crypto mining in China was a 38% drop in global network hashrate in June 2021 – which corresponds roughly to China’s share of hashrate before the clampdown, suggesting that Chinese miners ceased operations simultaneously. New data reported by partnering mining pools BTC.com, Poolin, ViaBTC, and Foundry confirms this observation: declared mining operations in mainland China have effectively dropped to zero, from a high of 75.53% of the world’s total Bitcoin mining in September 2019 when this data was first recorded.
That initial 38% drop in global hashrate in June was partially offset by a 20% “bounceback” over July and August, suggesting that some Chinese mining equipment has been successfully redeployed overseas.
Further, as of early October, the hashrate trajectory is indicating that all, or nearly all, of that June downturn would be fully recovered soon. If the August data updates are an indication for the future, then that recovery will likely be further distributed predominantly between the largest share gainers – US, Kazakhstan and the Russian Federation.
See: El Salvador taps renewable energy from volcanoes to start mining bitcoin
Outside of the top three, the next largest hashrate shares are Canada (9.55%), Ireland (4.68%), Malaysia (4.59%), Germany (4.48%), Iran (3.11%) and Norway (0.58%), followed by a long tail of countries.
The effect of the Chinese crackdown is an increased geographic distribution of hashrate across the world, which can be considered a positive development for network security and the decentralised principles of Bitcoin.
It is worth noting that the shares for Ireland and Germany are likely due to a growing number of miners rerouting through those countries via VPNs or proxy servers, rather than growing mining activity for which there is little or no evidence.
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