Key Takeaways
- Chinese mining pools operate 55% of the network, while U.S. pools manage 40%. U.S. pools
- China is set to tighten its Anti-Money Laundering (AML) regulations by 2025, extending them to cover cryptocurrency transactions.
Chinese Bitcoin miners continue to dominate the global Bitcoin network, maintaining over 55% of the network’s total hash power despite the country’s ban on cryptocurrency activities. While U.S. mining pools account for 40% of the hash power, China’s mining presence remains stronger, supporting mostly smaller miners in Asia.
“Chinese mining pools operate 55% of the network, while U.S. pools manage 40%. U.S. pools primarily cater to institutional miners in America, while Chinese pools support relatively smaller miners in Asia,” according to Ki Young Ju, CEO of CryptoQuant.
China’s continued involvement in the Bitcoin network is surprising, considering the 2021 blanket ban on Bitcoin mining and trading. In the years following the ban, Chinese miners have managed to adapt, largely through technological means and decentralized systems that have allowed them to avert the legal barriers in place.
To curb illegal crypto activity, China is set to tighten its Anti-Money Laundering (AML) regulations by 2025, extending them to cover cryptocurrency transactions. Financial experts involved in drafting the regulations noted that the proposed laws aim to address money laundering risks, with crypto usage persisting despite the ban.
Rumors of a possible change in China’s position on Bitcoin have also surfaced. In July, Mike Novogratz, CEO of Galaxy Digital, hinted that China might unban Bitcoin by the end of 2024. However, there has been no formal confirmation from the Chinese government on this matter.
Meanwhile, Bitcoin miners worldwide have faced challenges, with August marking the lowest revenue month for miners in over a year. This decline is linked to a rising difficulty in mining, which reached a record high of 89.47 trillion in August, up from 86.87 trillion the previous month. The increasing difficulty makes mining more energy-intensive, impacting profitability for miners globally.
Mining Bitcoin requires a tremendous amount of computational power, consuming around 176 terawatt-hours of electricity annually, surpassing the energy use of some entire countries. Countries with lower electricity costs offer a competitive edge for miners, which explains the continued activity in places like China despite the ban.
Additionally, Bitcoin miners continue to feel the effects of the fourth Bitcoin halving event, which occurred earlier this year. Following the halving, miners saw their revenue drop to record lows. During the period between March and Bitcoin block height 840,000, the network’s hashprice ranged from $85 to $115 per petahash per second (PH/s), reflecting the strain on earnings despite higher on-chain fees and block rewards.
