Even with authorities putting a viceroy grip on the cryptocurrency realm in China, Bitcoin miners have remained incredibly active and thorough in underground markets. The crypto crackdown first began in May of last year, at the very height of China's dominance in the sector. The monthly hash rate throughout most of 2020 sat around 67%. By October 2021, it dipped to 55%, wrought by even more stringent regulation in the form of complete mining and trading bans enacted in Sept.
Even so, activity in the Bitcoin mining scene has still remained and is slowly rebounding, even as China continues to implement more rules regarding the market. In early Dec. of last year, David Reiner via Fortune notes that "the Bitcoin community seems to have shrugged it off," it being a disruption to "the largest single center for activity." Now, it seems, things have only intensified since.
Underground mining operations situated across China prove that the realm is on the rebound. Most individuals involved are finding clever ways around China's crypto regulations, marking China once more as the most prominent player in the field, despite its lawmakers actively cracking down on it. According to research headed by the University of Cambridge, even with major laws banning crypto, China constituted a total of 22% of the global mining market in Sept. 2021.
It's important to note that Cambridge's research comes with somewhat of a data flaw in that the research may well be affected by what is called "deliberate obfuscation," which essentially means users utilizing a VPN (virtual private network) to mask their activities in the region (or regions). Cambridge's data relies heavily on aggregated geolocated bitcoin mining centers of activity.
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China's heavily regulated internet activity makes it highly plausible miners are pushing their locations elsewhere, but the research center does specify that such limitations would "only moderately impact" the given data. Cambridge also highlights that its findings prove of major importance that "these geographic shifts in mining activities bring to the fore how relocations impact the overall sustainability of the network."
For China's regulators, bitcoin mining means less overall energy output to the country. Crackdowns were first headed in light of major energy shortages, as the country relies most prominently on coal. In the face of targeting carbon neutrality by 2060 through the advancement and investment into more reliable renewable energy pathways, cryptocurrency mining proves to be a major stopgap for the country. The National Development and Reform Commission, alongside the People's Bank of China, have both signaled alarm bells on these issues to seemingly no avail.
For all its efforts, China remains a hotbed for cryptocurrency mining, despite even the dwindling prices experienced over the past few weeks. With an estimated two million bitcoins remaining to mine, the country seems like a haven for crypto enthusiasts and miners alike, at least as the second most profitable destination for "proof of work" endeavors next to the US.
