Chinese mining pools control over 50% of Bitcoin hashrate despite ban

Blockchain analytical firm CryptoQuant CEO Ki Young Ju said Chinese mining pools control almost 54% of Bitcoin hashrate despite the country’s ban on crypto mining.

Also read: Miner’s wallet reawakens after holding coins for 14 years

Ju’s chart, showing the monthly hashrate distribution over time, revealed that Chinese mining pools have been responsible for over 50% of Bitcoin’s hashrate in the last 12 months. However, he noted that these pools might likely include miners from other countries. Mining pools are groups of miners that combine their computational resources to perform more efficient mining operations.

Analysts suspect China is secretly mining Bitcoin

The dominance of Chinese mining pools and recent policies from the country have led to increased speculation that the government might have secretly eased up on mining restrictions. Mathew Sigel, the head of digital assets research at VanEck, suggested that China’s decision to stop publishing data on its renewable energy usage might just be part of its strategy to mine the top digital asset.

Bitcoin Mining Pools Hashrate (Source: CryptoQuant)

Over the years, China has held a restrictive stance on cryptocurrencies, banning the trading and mining of these digital assets within its jurisdiction. However, Bitcoin mining in China might not be as illegal as many presume, as pro-Bitcoin environmental analyst Daniel Batten said that the highly publicized ban on Bitcoin mining was just a temporary suspension that has since been lifted. He stated:

“It was falsely reported as a ‘ban’ by Western media. However, no evidence of a ban having even been written into any Chinese legislation. Nor do mining maps support the ‘ban’ theory. Nor do first-hand accounts of miner”

His report noted that several miners use clean, renewable energy in China. Batten added that most of these miners operate with government approval. He continued by saying that over 15% of Bitcoin’s hashrate still comes from China.

Hashrate in decline as miners struggle 

While Chinese mining pools might have most of the hashrate distribution, Bitcoin hashrate remains in decline, reaching new lows in recent months. According to the Hashrate Index, BTC’s hashrate, a metric used to measure the computing power of the Bitcoin network, fell below 560 EH/s towards the end of July, its lowest level in the past five months.

Also Read: CleanSpark’s $155 million acquisition of GRIID Infrastructure highlights Bitcoin miner’s struggles

The decline signifies that more miners are unplugging their machines as they struggle to profit from mining. This is a new reality for miners who have to deal with reduced block subsidies after mining, and some have been forced to sell off some of their Bitcoin holdings to continue operations.

Bitcoin monthly chaincheck (Source: VanEck)

A report from assets manager VanEck highlights how some miners are also pivoting to providing power for artificial intelligence just to make ends meet.

Sigel wrote, “This month’s data highlights a pickup in Bitcoin miners’ coin sales due to low profitability, with many miners pivoting power capacity to AI. As the market has re-valued those power contracts, miners’ total market cap reached an all-time high.”

However, selling Bitcoin might not be enough to prevent miners from capitulating, especially if the price drops further. Ironically, sell-offs by miners are among the factors putting sell pressure on the price of BTC.