The Bitcoin mining network is constantly growing, and as data showcases, it is also becoming more sustainable and more decentralized. In 2019 China was able to surpass 75% of the total Bitcoin mining hash rate. But this scenario has changed. What caused this shift? And how does the current hash-rate distribution differs from years back? This write-up is aimed to answer those questions.
Some may attribute the recent drop in Bitcoin price and bitcoin hash-rate to Elon Musk’s recent criticism. Elon Musk wanted to emphasize the carbon footprint behind Bitcoin itself. It brought environmental issues to life, causing a deep market correction. However, data indicates that drastic changes were already taking place in the Bitcoin mining ecosystem.
The event that most contributed to this sudden shift in mining output was the most recent China ban. This time, the mining ban in certain Chinese provinces seems to be taken more seriously than the previous ones. According to a report provided by State Media People’s Daily: “Last month China has set hard caps on carbon emissions and will strive to meet climate targets.” Consequently, in the last few months, China has been cracking down on coal-powered in several provinces. And with it, crypto mining is becoming cleaner and more decentralized.
So let’s take a look at the past crypto mining scenario and compare it with the current distribution. For many years China has taken the lead in the total Bitcoin hash rate with strong mining operations that accounted for 75% of global production. Since the crackdowns, China’s mining output has dropped to 46% in just years.
Many countries are shifting to sustainable energy resources or using a surplus of energy already produced by the country. And we now have very strong global players emerging as the USA, Kazakstan, Russia, and Iran.
As indicated in the row chart above Bitcoin mining is more decentralized this year than in 2019. In fact, according to statista.com is more distributed than ever before. China still takes the lead as the top miner in the world, but other countries such as the USA, Kazakstan, Russia, and Iran have increased their mining capabilities considerably. On another note, China suffered a significant drop. This seems to be healthy for the overall stability of the bitcoin network. It provides a more decentralized output and helps protect the network against a conglomerate of mining resources in one region of the globe.
Globally bitcoin miners are aimed to create sustainable mining operations. One that is looking to please the new global carbon offset standards. In my opinion, what is driving this shift is not the random words of Elon Musk, but real-world regulations that are focused on environmental concerns. In this case, China is strongly affected and has to reduce its coal power dependency for more sustainable, carbon-neutral energy sources. That may just take time.
In conclusion, the race to carbon-neutral mining has already started.