China Can’t Seem to Stop Bitcoin Mining

Reported hashrate fell to zero for two months in China last year, but it has since returned rather abruptly.

Last week, Cambridge University’s Cambridge Centre for Alternative Finance (CCAF) released an update to its heavily cited (and rightfully so) Cambridge Bitcoin Electricity Consumption Index (CBECI), which in part looks to uncover and share the geographic location breakdown of bitcoin miners globally.

The previous Cambridge update showed that China’s share of mining went from 34.3% in June 2021 to 0.0% in July 2021 following a crypto mining ban in the country. Last week’s update showed that China’s share of mining went from 0.0% in August 2021 to … 22.3% in September 2021.

Clearly something is up here, so let’s dive in. While we are there, we’ll also touch on two other bitcoin mining related topics: 1) hashprice and 2) mining company woes.

China banned bitcoin mining in May 2021, and it showed up in the data. By July, there were virtually no miners mining in China. None in August either. Then, in September, almost all the miners who left came back. At least, that’s what the data shows:

CoinDesk - Unknown
(Cambridge Centre for Alternative Finance)

Perhaps it’s not obvious so I’ll say it: That didn’t happen. Moving mining operations isn’t exactly easy. The bulk of mining operations isn’t a handful of hobbyists messing around; Bitcoin has long since graduated from that. Most miners are more properly characterized as commercial operations, paying triple net leases for warehouse space and depending on fancy power purchase agreements for electricity.