Could China lose the Role of the Dominant Crypto Mining Hub?December 14, 2019
The position of China in the domain of Bitcoin mining is well known and well documented. Over the previous decade, the country gradually developed into the main producer of the hashing potential of this cryptocurrency network. Today it is by far the most important player in the global growth of the Bitcoin network’s hardware potential. In fact, no other nation in the world can even claim second place with any major certainty.
That is why so many believe that the position of China in this regard is secure at least for the next decade. Yet, there are others who suspect that the same balance of power can and will be changed long before 2030 hits. That option would include a changing world when it comes to major hashing centers.
Naturally, the scenarios and possibilities are based on the combination of current status and future potential, all of which reside on projects that are still in development. However, the picture that these scenarios paint provides an insight into a different setup when it comes to the control of large-scale crypto mining. Chances are that this setup will not develop into reality exactly like this, but still, it is something that the Chinese mining pools and companies are likely more than aware of.
The latest data shows that the dominance of China in the total Bitcoin hash rate keeps on growing. This single nation now accounts for about 66 percent of the total network computing power. Historically, this is a continuation of the previous status quo. Even in the early days of the network, China was seen as the main provider of the hash potential.
This follows a general rise in the network mining capability during 2019. In the past 12-month period bits of news constantly came out about the Bitcoin network breaking records in terms of its computing power. At the same time, the mining companies themselves seem as secure in the future as they have ever been. In China alone, many business entities decided to either expand their crypto mining operations or to start new ones.
The rainy season alone this year ear in the Eastern and Southern parts of China attracted millions of USD in crypto mining investment. During this period the price of electricity in those provinces became very low. Companies used this opportunity to mine cryptocurrencies, not just Bitcoin, on a huge level. All of this shows that companies and mining pools are really confident about the future.
The position of China seems cemented but this did not stop many other companies from creating or planning cryptocurrency mining operations outside of this country. In fact, facilities that can be the only label as mega-mines are being developed or at least planned in both Russia and the United States of America. Bitmain, one of the biggest names in the industry is creating a huge mining operation in Texas. The potential of the same facility is currently at 50MW but the Chinese operator wants to take it to three hundred MW soon after it begins working.
At the same time, domestic US companies are also opening mines in the same state. Layer 1 from San Francisco is a great example. It is also building a facility in Texas and is seeking to directly compete with companies like Bitmain. To do this, it is planning on using cutting edge technology development to improve the hardware of mining rigs, but also do the same for the cooling process.
Its ambitions are even greater for the months and years to come, while the company plans for controlling the entire mining cycle, starting with chip production and going all the way to generate electricity. Many other companies and startups are trying to do the same. In other locations around the world race is not for the best optimization through technology, but to attain the best possible environment, both financially and climate-wise, to produce digital tokens.
The Cold North
While some companies are flocking to Texas and other sunny locations, other ventures trying to get the most from colder spots on the globe. Russia is a growing star in this domain. Thanks to its location but also its Soviet heritage, the Russian Federation is fast becoming a leader in crypto mining. Here companies can find abandoned infrastructure that was built all over the once-superpower nation and its insatiable industrial development.
Now with the breakdown of the Soviet Union, many of these spots fell into disarray. This includes massive industrial sites, most of which are located in the far north of the country or the Siberian region. There, the mining companies have a relatively simple job of ensuring that the electrical installations are operational. Once these are up and working, the mining rigs are brought in. The low year-long temperatures outside are used for natural cooling. This way Russia provides one of the best setups for any mining pool in the world.
Growing Micro Competition
The competition for Chinese dominion is not only coming from these two superpowers. Instead, an array of nations is seriously getting into the mining game. Some would expect them to be hubs of esports, programming and other expanding IT branches. This does not have to be the case and Iran represents the same idea perfectly. This country recently started perceiving bitcoin and cryptocurrency mining as a regular industry. Others will follow suit in many different regions of the world.
It is easy to understand the appeal of these kinds of operations. Right now the price of Bitcoin is stagnating but the same will not stay this way forever. Instead, a spike in the price is inevitable sooner or later. The same goes for the fears that cryptocurrencies might simply implode – most realize that they will not. This makes crypto mining also a thing that is here to stay. As mining expands across the world, it is almost certain that Chinese dominance will be at least challenged in the years to come.