The Great Exodus From China Continues – The Future of Bitcoin Mining Lies in North America
China may well have to regret its Bitcoin ban in a few years.
Written by Sylvain Saurel - In Bitcoin We Trust
For several years now, China was the dominant nation in Bitcoin mining. The dominance was such that Bitcoin's opponents never missed an opportunity to criticize Bitcoin by saying that the centralization of its Hash power was a major weakness.
Besides, the fact that China dominated Bitcoin's Hash power to such an extent raised serious questions about its environmental impact.
Again, this was a boon to Bitcoin's opponents. And then China finally decided to enforce its ban on Bitcoin more strictly from May 2021. This caused a great exodus of Bitcoin mining from China to the West.
China's mining ban totally reshuffles the deck
Before this decision by the Chinese authorities, China still accounted for 46% of the global hash rate in the Bitcoin network. This was already a major decrease in its market share compared to 2019 when it peaked at 75% in September of that year.
Faced with the decision made by the central government in Beijing, five Chinese provinces quickly shut down the activities of Bitcoin mining companies. These are Inner Mongolia, Xinjiang, Qinghai, Yunnan, and Sichuan.
This caused the Bitcoin hash rate to plummet, adding to the market's fear and thus promoting the Bitcoin price crash in May 2021.
For the first time since the advent of ASICs in 2013, the Bitcoin mining industry is looking for a new area of global dominance. And it would appear that North America is the area that will dominate Bitcoin mining in the future.
Marathon Patent Group wants to become a global leader in Bitcoin mining
Several American companies that have been betting on greener Bitcoin mining for several months will benefit fully from China's removal from the equation.
The first is the Marathon Patent Group, which is already the number one Bitcoin miner in the United States. For several months, the company has been steadily increasing its arsenal of ASICs. Marathon has also made it known that it intends to produce Bitcoin in compliance with the Office of Foreign Asset Control (OFAC) anti-money laundering requirements.
This move by Marathon has naturally been met with a lot of backlash from the rest of the Bitcoin community since it would create two types of Bitcoin: Bitcoin that is clean in America's eyes, and Bitcoin that is derived from other miners around the world.
Aside from this initiative, Marathon is committed to achieving carbon neutrality for its Texas site. The new 300-megawatt mining farm is expected to house 73,000 ASICs. Operational in the first quarter of 2022, the site is expected to have a hash rate of 10.4 EH/s with initial carbon neutrality of 70%.
The goal is to reach 100% in the coming months and years.
Riot Blockchain will soon be running the largest mining farm in the US
Behind Marathon, we find Riot Blockchain which has also reinforced its Bitcoin mining ASICs equipment for several months. The last deal that made a big splash was in April 2021 when Riot Blockchain struck a deal with Bitmain to deliver 42,000 Antminer S19 for $138 million.
The global semiconductor shortage has slowed down the deliveries, which are scheduled to start in November 2021 and run through the rest of 2022.
At the same time, Riot acquired a new data center located in Whinstone, Texas. The company paid $80 million in cash while selling 12% of its stock to the former data center operator. When operational, this Bitcoin mining farm will be the largest in the United States.
As of June 2021, Riot Blockchain has reportedly mined 243 BTC, an increase in production of 406% compared to the same month of the previous year.
Canada also reinforces North America's upcoming dominance in Bitcoin mining
In addition to these American companies that are poised to become the new giants of Bitcoin mining globally, there is a significant takeover in this sector by companies located in Canada.
Hut 8 has long been the largest North American miner in terms of hash rate. The collapse of the Bitcoin price in 2018 as well as changes in legislation had negatively impacted the company at the time. Hut 8 had been forced to sell its Norwegian site for regulatory reasons.
This led to Hut 8 reporting a $136 million loss in 2019.
The bullish rally that began in October 2020, however, has positively changed things for Hut 8. The company was even successfully listed on the Nasdaq in June 2021. Already listed on the Toronto Stock Exchange, Hut 8 was able to raise more funds in the deal which allowed it to keep its war chest.
Hut 8 has indeed a rather particular policy. The company seeks to retain the majority of the Bitcoin it mines. Thus, Hut 8 is the company holding the most self-mined BTC with a goal of 5,000 BTC held by 2022.
Finally, the last major player in North America is Hive Blockchain. This company specializes in green Bitcoin mining. The company operates mostly sites powered by green energy. From Canada to Sweden to Iceland, Hive Blockchain uses all forms of green energy for its operations.
While Hive Blockchain also had to part ways with its Norwegian site in May 2021, the company has compensated for this loss by reinforcing its equipment for one of its Canadian sites.
Final Thoughts
As nature abhors a vacuum, the Bitcoin hash rate has already rebounded strongly with players redeploying around the world. North America is already positioning itself as the future geographical area that will dominate Bitcoin's Hash power.
This is a good thing for at least two reasons. First of all, it will give more guarantees to players wishing to invest in the Bitcoin world. The economic, legal, and geopolitical stability of the United States and Canada make them an excellent location for the future of Bitcoin.
Secondly, it will improve the environmental impact of the Bitcoin system, whose share of electricity from renewable energy sources already reached 56% at the end of June 2021. The best is yet to come for the Bitcoin system. As for China, it may well be that the country will bitterly regret this choice in a few years.
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China's ban cleansed Bitcoin from China FUDs, which is another good thing. Moreover, it's obvious mining companies had huge impact by the regulations of Chinese government. I don't think NA companies wouldn't have such regulations, their arrangement would advance much more straight than the companies in China. Therefore, personally I would prefer NA countries to bear hash rate dominance.
The other subject is that, NA companies are trying to yield greener ecosystem, as you mentioned. The difference is huge compared to China, so it is a good sign that NA will take over this.
We will observe what will happen in future. Most probably it will be good for a large portion of people as well as the earth.
Thanks for the article!
I think it was a problem that China was so dominant in hash power. I think China, which caused this migration with the Bitcoin ban, will regret it in the future.
Thank you for your article.