US Overtakes China as Top Bitcoin Mining Hub, Prompting Questions About How Beijing Will Respond

A recent Cambridge report confirms that the United States now leads global Bitcoin mining, prompting questions about how China will respond.

The U.S. has become the world’s largest Bitcoin mining hub, according to a recent report by the Cambridge Centre for Alternative Finance (CCAF). The report, which was published in July, found that the U.S. now accounts for 75.4% of the reported hashrate.

This newest development showcases a reversal of power in terms of Bitcoin mining. Back in 2017, China was already identified as the world’s leading Bitcoin mining nation. At one point, the Asian nation contributed up to 75% of the global hash rate.

However, towards the end of 2021, the Middle Kingdom declared all crypto-related transactions as illegal, rendering any use of crypto-assets in China invalid. This move prohibited Chinese citizens from trading on foreign cryptocurrency exchanges.

But China has a history of quickly adapting to geopolitical shifts that could affect its economic standing, and the current climate may present such a challenge.

What Is the Latest on Bitcoin Mining in China?

Despite China’s well-known stance on crypto, reports from July indicate that the country’s hashrate contributes about 15% of the global total, according to Bitcoin environmental impact analyst Daniel Batten.

This is despite the fact that at least four Chinese provinces began shutting down mining operations in 2021 amid concerns over excessive energy consumption. Earlier that year, the National Development and Reform Commission of China (NDRC) also released a draft law which would categorize cryptocurrency mining as an “undesirable industry.”

However, the Asian nation is known for quickly pivoting to adjust to new economic trends. In July, representatives from The Coin Bureau and Wanchain spoke with BeInCrypto about what might encourage China to change its stance on digital assets.

Discussing the new CCAF report, which found that the U.S. has overtaken China as the top crypto mining hub, the Coin Bureau’s co-founder, Nic Puckrin, said that the combination of Trump’s trade friction and the U.S.’s invigorated push for crypto dominance might be enough to make China reconsider its position.

“It’s unlikely China will make a public U-turn on its crypto mining and trading ban anytime be but with US-based miners now accounting for higher and higher proportions of Bitcoin’s hashrate, China is bound to be paying attention and may well be quietly reassessing its stance.”

China also has a geographical advantage over the U.S., especially when it comes to technological advancements. Crypto mining, especially for proof-of-work cryptocurrencies like Bitcoin, depends on Application-Specific Integrated Circuit (ASIC) equipment to carry out the necessary complex calculations for validation and mining.

China’s position as a top exporter of crypto mining hardware, particularly to the U.S., provides it with an edge should it decide to quickly ramp up its mining sector again. But the unfolding tariff dispute between the two nations adds another layer of complexity to the long-term cost efficiency of U.S. mining operations.

This factor, along with the U.S.’s competitive edge in crypto mining and renewed hostility over trade policy might motivate China to quickly cooperate.

China’s Plans for Digital Currency

Even though China is against the use of cryptocurrencies, it might still see the value in digital assets to counterbalance the U.S. dollar’s world currency dominance.

Several countries are either adopting or considering central bank digital currencies (CBDCs) to strengthen their domestic currencies. China is at the forefront of these developments.

“Despite the ban on Bitcoin mining, China has actively participated in the digital asset space, e.g., with initiatives like CDBC research and the digital yuan, or e-CNY,” added Wanchain CEO, Temujin Louie.

Indeed, China’s efforts to create a digital yuan are partly driven by its desire to de-dollarize its economy and lessen its dependence on the greenback.

According to Louie, whatever move China makes won’t be solely based on what the U.S. does or does not do. But it will be interesting to see how these broader macroeconomic and geopolitical trends will factor into China’s thinking in the second half of 2024.

“As always, with China, a nuanced approach is best. Any shifts in policy will not be due to US tariffs. Rather, China’s decisions will be informed by global market trends and China’s own domestic strategy.”

This signals that the unfolding tariff dispute between the two nations will add another layer of complexity to the long-term cost efficiency of U.S. mining operations.

This factor, along with the U.S.’s competitive edge in crypto mining and renewed hostility over trade policy might motivate China to quickly cooperate.

China’s Position on Crypto and Its Zoom Out View

Apart from its focus on the e-CNY, China’s complete stance on crypto has also shown some contradictions which may