China is the second country in the world where the most bitcoins are mined, according to a study from the Cambridge Center for Alternative Finance (CCAF) on May 17. Problem, bitcoin mining has been strictly prohibited there since June 2021.
Well-hidden Bitcoin miners
China has long remained the undisputed leader in Bitcoin mining. The country accounted for between 65% and 75% of cryptocurrency mining. This figure fell to 0 in July-August 2021 after it was banned.
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According to CCAF data, mining resumed as early as September 2021. Today, China accounts for 21.11% of mining behind the United States, 37.84%. The country is ahead of Kazakhstan, 13.22%, once a host country of idle Chinese miners, but since then faced with political crises and electricity shortages.
For the CCAF researchers, these results “ strongly suggest that significant underground mining activity has formed in the country”. They add that it “empirically confirms what industry insiders have long assumed. “.
Chinese miners know how to keep a low profile, “ Access to off-grid electricity and geographically dispersed small-scale operations are among the main ways underground miners use to hide their operations from authorities “.
China wants to get rid of mining for ecological reasons
The CCAF specifies that it is possible that its figures are biased because of a ” deliberate obfuscation “. Put simply, miners use VPNs to conceal their locations. Germany and Ireland, for example, represent respectively 3% and 2% of the extraction rate, without having any particularly significant activity in the sector.
This precaution taken, the researchers estimate that the impact of this bias has a moderate impact on the precision of the analysis concerning China. The country has banned mining because of its extremely energy-intensive and polluting nature, the majority of electricity coming from coal-fired power stations. China took the opportunity to develop its own digital currency.