Bitcoin’s Recovering Hashrate Suggests Chinese Miners Might Have Successfully Relocated

After experiencing a significant slump both in performance and in price, the Bitcoin network seems to have slightly recovered. The slump began at the beginning of summer when several Chinese provinces initiated massive crackdowns on mining operations in their regions. Some of the largest Bitcoin mining farms in Sichuan, Yunan, and Inner Mongolia provinces were forced to shut down and search for alternative locations as local governments issued notices ordering them to close. The notices were all part of China’s path towards reducing its energy footprint.

Forced to shut down, dozens of large mining operations in China were forced to temporarily shut down and relocate. As many of those farms were connected to hydropower plants in Sichuan, the region also saw an increase in the number of plants being put up for sale.

Last month, Alex Brammer, the Vice President of Business Development of Luxor & Hashrate Index, said that while moving operations overseas won’t be an easy task for Chinese miners, he expects many of them to relocate to Russia and Kazakhstan. Other experts predicted that many miners will seek to relocate to the U.S., as many northern states offer cheap electricity and favorable weather conditions for large farms to operate.

And now, according to Colin Wu, a Chinese journalist posting on the WuBlockchain Twitter account, the latest data shows that some of these migrations might have actually been successful. In a tweet posted on July 15th, Wu noted that the recovering hash rate Bitcoin has seen in the past few days indicates that at least several large miners have set up and gone online.

Screengrab showing the raw values for Bitcoin’s hash rate between June 14th and July 14th

(Source: Blockchain.com)

After dropping to as low as 58.4 EH/s on June 27th, Bitcoin’s hash rate began a slow, but steady recovery process that saw its raw values reach as high as 121.4 EH/s on July 14th. While it might take several more days before a more realistic moving average can be established, the data clearly shows a much healthier and more robust network.

Wu believes that this is a result of successful relocations either in Kazakhstan or in Russia. However, he doesn’t believe that any of the planned migrations to North America have been successful. This could be a result of several different factors, the first one being the logistics of moving operations from mainland China to American states such as Wyoming or Washington. Secondly, tighter regulation in the U.S. could also be slowing down the miners even if they managed to transport their equipment overseas.

According to Wu, some small hydropower plants in China could have also started their own mining operations and contributed to the recovering hash rate. While this is still just speculation, it’s backed by local sources claiming some of the hydropower plants currently for sale in Sichuan offered prospective buyers the ability to set up mining operations directly in the plants.

Publication date: 
07/16/2021 - 06:08
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