China’s broad Bitcoin mining expulsion this year, coupled with its most-serious crypto ban to date, is a clear inflection point in the nascent-yet-growing Bitcoin space.
In the subsequent fallout, North America—particularly, the United States—emerged as the dominant mining hub around the world.
Though this data from Cambridge’s Bitcoin Electricity Consumption Index is imperfect; it leans on IP address data, which can be unreliable due to VPNs and other IP-scrambling technologies, and it is incomplete as it only draws from four Bitcoin mining pools, it’s likely not far off the mark.
With competition clipped by China’s mining ban, they are producing more blocks than they otherwise would have if Chinese miners, which used to represent anywhere from 50-60% of the network, remained online.
Thanks to a plethora of financing options made more readily available with Bitcoin’s growing popularity, these public companies are raising more money than ever before to expand their operations.
China historically held an unshakeable foothold as the top mining destination in the world.
Juggernaut as it was, the CCP’s mandates completely dismantled the once booming bitcoin mining industry in China.
With so much hashrate turned off, Bitcoin’s difficulty lowered to make it easier to mine.
Of course, hashrate bounced back as fast-moving Chinese miners turned on rigs elsewhere and mega-farms in North America and elsewhere turned on new machines of their own.
The sources claiming that hashrate has rebounded to pre-China ban highs relied on 1-day estimates, which can be skewed if blocks come out faster or slower than usual; a more accurate measurement looks at the moving average across one or two weeks.
Looking further down at the Coinmetrics chart, daily mining revenue in USD has been moving up in sync with the hashprice thanks to Bitcoin’s rally from $30,000 to its new all-time high of $66,500.
All of this also lead to impressive gains for the stocks of these publicly-traded mining companies, which have provided a 217% return on average.
I expect these companies to continue trading as a Bitcoin proxy for investors who want exposure without owning the asset outright.
The restrictive nature of these products, overhead that comes with rolling over monthly contracts, and expense ratios make them an imperfect competitor to Bitcoin or its associated mining stocks.
Even when spot market ETFs for Bitcoin get approved, investors will no doubt continue to look at these stocks as roundabout investment vehicles for Bitcoin itself, and much in the same way gold miners trend up and down with gold, they will track Bitcoin’s price.
I am the head of content at Luxor Technologies, a full-stack Bitcoin mining pool, where I produce research for the pool’s data analytics platform, Hashrate Index.