China has long been the epicenter of worldwide cryptocurrency mining, which is a time-consuming and energy-intensive operation. Many bitcoin miners in China utilize fossil fuels such as coal, raising worries about bitcoin’s environmental impact.
However, the limitation on Bitcoin mining due to energy consumption concerns is widely seen as the impetus for the miners’ migration from Asia to Western countries which reduced the mining power in China. Nevertheless, new data from the Cambridge Centre for Alternative Finance shows that the change in mining power began before China’s strict regulation.
As per Reuters, China’s total computing power linked to the Bitcoin network, or hash rate, dropped from 75.5 percent in September 2019 to 46 percent in April 2021, even before the Asian country officially revealed the mining crackdown.
During the same period, the United States’ share of hash rate increased from just over 4 percent to 16.8 percent, making it the second-largest producer of bitcoin. Kazakhstan’s contribution increased to about 8%, with Russia and Iran being the other leading markets.
Following severe power disruptions in the mining center of Xinjiang in April, Chinese officials began looking into the energy usage associated with Bitcoin mining. Due to carbon worries, officials declared rigorous oversight of mining activities, prompting the migration of numerous industrial miners out of China.
According to Bitmain’s EMEA partner, the government is obligated to decrease its carbon footprint to get money from the International Monetary Fund or the World Bank, and Bitcoin mining was a handy target to cut energy usage.
CCAF’s regulatory landscape of crypto asset activities study released in April 2019 revealed that very few jurisdictions have included or explicitly mentioned mining in their regulatory guidance on crypto asset activities. Mining has, however, sparked greater regulatory attention recently, and in some instances led to the development of bespoke legal frameworks for mining activities.
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