New data reveals timeline of Chinas bitcoin mining exodus – News & insight – Cambridge Judge Business School
the cambridge center for alternative finance (ccaf) research team reveals new datasets showing geographic shifts in bitcoin mining, with china’s share falling sharply even before the government crackdown in june 2021 .
by michel rauchs, head of digital assets at ccaf
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When the Cambridge Bitcoin Electricity Consumption Index (CBECI) was conceived and launched in 2019, it was against a background of growing concern about the sustainability and environmental impact of bitcoin mining. Since then, and especially in recent months, the debate surrounding bitcoin’s seemingly insatiable appetite for electricity has gained momentum and ignited global debate.
cbeci, which is an independent platform for reliable information and unbiased opinions on bitcoin electricity consumption, has been regularly cited in both academic research and global media in its assessments of the state and trends of mining of cryptocurrencies. Now, a major update to the digital tool cbeci has shed new light on the mining market, suggesting that china’s share of the global hashrate (the total computational power of server farms participating in the bitcoin consensus process) ) has been in significant decline for some time before the recent crackdown on bitcoin mining announced by the country’s government in June 2021.
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new data compiled by ccaf at cambridge judge business school, university of cambridge, reveals that china’s share of total bitcoin mining power has decreased from 75.5% in september 2019 to 46 % in April 2021, even before the restrictions were imposed. In the same period, the United States’ share of the total bitcoin hashrate increased from 4.1% to 16.8%, putting it in second place. one of the most notable observations is the almost sixfold increase in mining participation in kazakhstan. an energy-rich country located in central asia, has seen its share rise from a mere 1.4% in september 2019 to 8.2% in april 2021, catapulting it to third place in global mining energy share. the russian federation (6.8%) and iran (4.6%) round out the top five, as shown in the chart below.
For the first time, this new geolocational data, collected in partnership with four Bitcoin mining pools – BTC.com, Poolin, ViaBTC and Foundry – provides an unprecedented empirical view of the geographical evolution of Bitcoin mining. This exclusive dataset, which represents approximately 37% of the Bitcoin network’s total computing power, confirms for the first time the seasonal migration patterns in China that have only previously been anecdotally observed.
The data reveals the annual migration of miners and their equipment from the northern province of xinjiang in the dry season, to the southern province of sichuan in the rainy season to take advantage of the abundant electricity generated by hydropower at a lower price. In 2020, Sichuan’s share of China’s total Bitcoin mining power increased from 14.9% at the start of the rainy season to 61.1% at the peak. In contrast, the proportion of mainly coal-based hashrate from Xinjiang during the same period decreased from 55.1% at the beginning of the rainy season to 9.6% at the lowest point. This seasonal migration has materially affected the energy profile of bitcoin mining in China, which has so far been by far the largest “mining market,” illustrating the complexity of assessing the environmental effects of mining.
However, this seasonal migration pattern within China may well end as the government’s Financial Stability and Development Committee recently banned mining operations in the country. This has effectively led to all of China’s hashrate disappearing overnight, suggesting that miners and their equipment are on the move. Where will they move to? Gains in the US and Kazakhstan might be an indicator, but the next upcoming data updates reflecting the impact of China’s mining ban will provide greater clarity as to where the hashrate has moved. It is hoped that once the initial relocation is completed that updates via a dedicated application programming interface (API) can be delivered monthly from the mining pools.
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The research team is working to examine further updates to the tool and the underlying datasets and is actively looking to add more mining pools to the list of data contributors to provide as complete a sample as possible. any interested group should get in touch through the cbeci website.
Other features of the new version of cbeci include:
- refinements to the best estimate of the index.
- a redesign of the comparisons page with new explanations and comparison data.
- an updated FAQ section for address key questions received since launch.
- adding versions and downloadable csv files for use by third parties freely available for the public good.
In the future, the ccaf team plans to examine the ability to link electricity use and the geographic distribution of hashrate to greenhouse gas emissions, through a new model, to assess the environmental impact of the bitcoin mining. As institutional investors continue to monitor the cryptocurrency mining market, esg considerations are coming to the fore: uncertainty around environmental credentials could become an existential threat to the industry or create a market-driven incentive to actively decarbonize, or both. more data and ideas are required to inform and facilitate a balanced discussion of the evidence. And of course, as the crypto landscape continues to develop, the team is investigating the potential to extend the analysis to other digital assets and networks. watch out for this space!
you can contact the author at [email protected]
note: this project is part of a larger research stream on climate aspects of digital assets. Other research streams from CCAF’s Digital Assets Program include Distributed Financial Market Infrastructure (DFMI) configurations and processes, the collection of blockchain networks and related application ecosystems, as well as emerging money systems. such as stablecoins and other digital tokens.
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