China’s bitcoin miners now control two-thirds of the crypto network’s processing power, research showed on Wednesday. And a growing share that is likely to benefit the country’s miners.
Miners in China control 66 percent of the power of all computers around the world that are hooked up to the bitcoin network, according to a report by digital asset manager CoinShares. That power is known as the “hashrate,” and it dictates a computer’s ability to produce new coins.
The Chinese share of hashrate, up from 60 percent in June, is the highest recorded by CoinShares since it began tracking hashrate nearly two years ago. The gains may be due to China’s greater deployment of more advanced mining gear, said Chris Bendiksen, the firm’s head of research.
Chinese companies such as Bitmain and MicroBT are among the world’s biggest manufacturers of bitcoin mining gear. Another, Canaan, launched a $90m initial public offering in November, indicating investor hunger for exposure to miners.
At bitcoin’s current price of around $7,200, miners produce bitcoin worth around $4.7bn every year.
“This is beneficial to the Chinese mining industry,” said Bendiksen. “If you are the first to increase your proportion of the hashrate, and you can do that before your competitors, that’s generally good.”
Crypto-mining is a highly opaque sector, with little reliable data on the bitcoin network or bitcoin miners.
Bitcoin miners draw on huge amounts of computing power as they battle against others to solve complex mathematical equations to earn new coins. The higher the hashrate, the more power is needed to produce bitcoin.
And mining has become more difficult. The network’s hashrate has risen 80 percent since June, in part because of the strong profitability of miners and more powerful machines, said London-based CoinShares, which manages around $600m in digital assets.
China has cracked down on crypto-exchanges and fundraising in recent years, even as it develops its own digital currency.
After looking at banning crypto-mining, Beijing last month indicated it would not do so. Some analysts interpreted the move as indicating tolerance of the sector.
The most significant crypto mining hubs are in China’s Yunnan, Xinjiang, Inner Mongolia, and Sichuan provinces, CoinShares said, with the latter accounting for over half the global hashrate. Other centres are spread from the United States to Russia and Kazakhstan.
China’s share of hashrate may fall as more Chinese-made next-generation gear makes its way into other markets, CoinShares said.