The US has become the leading contributor of Bitcoin’s (BTC) global hashrate, surpassing China for the first time. A report disclosed this news on October 13, citing new data from the Cambridge Centre for Alternative Finance, which scouted BTC electricity consumption across the globe. The university released its findings through the Cambridge Bitcoin Electricity Consumption Index.
According to the index, the US generated 35.4% of BTC’s global hashrate as of July 2021. This figure represents a 428% increase since September 2020. While the US previously generated a notable amount of BTC’s hashsrate, its dominance comes after China banned crypto mining earlier this year. Before the ban, the country generated 67% of BTC’s hashrate.
Following the ban, mining companies started an exodus, searching for jurisdictions with affordable power and friendly regulations.
Per Darin Feinstein, the co-founder of North American mining operator Core Scientific,
“If you’re looking to relocate hundreds of millions of dollars of miners out of China, you want to make sure you have geographic, political, and jurisdictional stability. You also want to make sure there are private property rights protections for the assets that you are relocating.”
Suitable conditions for miners
Fortunately, various US states met most of the above requirements, attracting Chinese mining companies. An example is Texas, which offers some of the lowest energy prices in the world. The state has been increasingly working on tapping wind and solar energy over the years.
However, Texas gets most of its power crude oil, which takes a toll on the environment. With ESG concerns over BTC mining mounting, Senator Ted Cruz proposed that Texas tap natural gas for BTC mining instead of flaring it. According to him, this would help power mining rigs while helping BTC minimize its carbon footprint.
At the moment, Texas generates 14% of the total BTC hashrate in the US. However, there are other greener states, which are rushing to get a piece of the mining industry. Reportedly, New York accounts for 19.9% of BTC’s hashrate in the US. Kentucky and Georgia are also leading players in the sector, generating 18.7% and 17.3%, respectively.
The US had prepared to host mining firms
Although China’s crypto ban played a vital role in helping the US dominate the mining industry, its success did not only rely on sheer luck. Reportedly, the US started preparing to support crypto mining as early as 2017, building its hosting capacity over the years.
While this gamble that saw companies like Foundry help bring over $300 million worth of mining equipment into North America, it is now paying off as more mining firms continue setting up shop in the US.
Apart from the US, Kazakhstan has also become another top destination for crypto miners, accounting for 18.1% of all crypto mining. However, the country’s primary source of energy is coal. Experts believe its proximity to China saw some mining companies make a temporary stop as they gear up to migrate west.