A new report from Reuters, citing CoinShares, indicates that China’s Bitcoin miners now control a whopping 66% of the world’s crypto network’s processing power. This could be bad news for US miners as it signals China is quickly advancing.
Also known as “hashrate,” it’s the speed at which a computer is performing an operation in Bitcoin code to unlock coins, China has been steadily gaining hashrate share this year.
In June, China’s Bitcoin miners controlled 60% of the global hashrate, and now the figure is up to 66% in December.
Chris Bendkisen, head of research at CoinShares, believes the rapid increase in the Chinese share of hashrate could be due to the deployment of advanced mining technology.
“This is beneficial to the Chinese mining industry,” said Bendiksen. “If you are the first to increase your proportion of the hashrate, and you can do that before your competitors, that’s generally good.”
Mining crypto has become more difficult over the last several years as profitability sags. The overall Bitcoin hashrate has risen 80% since June, which in recent times, has created stronger profitability for miners who have access to cheap energy.
With China controlling more and more of the world’s Bitcoin hashrate, some worry that the US could be falling behind the crypto curve, as Beijing is making a state effort to be a leader in blockchain.
Xiao Wunan, an executive vice-chairman of the China-backed Asia Pacific Exchange and Co-operation Foundation (APECF), recently told CNBC that Beijing’s crypto initiatives are strategically important to the communist party.
“Blockchain is the technology field that China started to develop almost at the same time as other countries in the world,” said Xiao, who was employed by the Chinese government. “It’s hard for China to claim technological supremacy on fields like Internet Plus [China’s initiative on information technology] or artificial intelligence, but the blockchain technology would be a perfect fit for China’s technological dominance.”
“It’s called ‘corner overtaking’ strategy in Chinese,” Xiao added.
The largest mining facilities in China are in Yunnan and Sichuan provinces, CoinShares said, which account for at least half the world’s hashrate.
Other top mining hubs are in the US, Russia, and Kazakhstan.
China could be laying the groundwork for a state-backed digital currency in the mid-2020s as it wants to become a leader in crypto in the intermediate timeframe.
So what’s next for Bitcoin?