This issue’s summary: Global bitcoin mining arithmetic is currently undergoing a transformation, with North American mining companies led by Musk vying for the right to keep track of bitcoin mining worldwide.
Recently, a new round of regulatory storms hit the cryptocurrency industry in its darkest hour.
CoinMarketCap data shows that from May 12 to May 25, the total market capitalization of the cryptocurrency industry as a whole retreated, with market capitalization shrinking by more than a trillion dollars, a drop of up to 40% at one point.
On the news, since May 18, first, the three associations issued a notice prompting to prevent the risk of virtual currency trading speculation; then, the Inner Mongolia Development and Reform Commission issued a “Notice on the establishment of a reporting platform on virtual currency “mining” enterprises”; immediately after, the State Council Financial Stability Development Committee held its fifty-first meeting to crack down on bitcoin Mining and Trading ……
The cryptocurrency industry has been in a state of flux for a while, with cryptocurrency prices plummeting and market panic spreading. At the same time, the shutdown of domestic mining farms and the forced migration of miners to the sea seems to be a “foregone conclusion”.
Chinese Miners Forced to Go Overseas, 65% of Computing Power May Face Transfer
Mining is a “black word” in the Bitcoin industry, which specifically refers to using the computing power of a chip to constantly “hash collide” in the blocks generated by the Bitcoin system to win the right to keep track of them and thus receive the system’s reward of Bitcoins.
Chinese miners have been dominating the global bitcoin mining network. According to data released last year by the Cambridge Centre for Emerging Finance (CCAF), Chinese miners account for 65.08% of the world’s total mining power. They are followed closely by the United States and Russia in that order. Upon inquiry, this data also matches data previously published by crypto capital management firm CoinShares that Chinese mining pools already owned 65% of Bitcoin’s network-wide computing power as of the end of 2019.
CCAF data also shows that Chinese miners are mainly located in four provinces: Xinjiang, Sichuan, Inner Mongolia and Yunnan. The reason for this is that Xinjiang and Inner Mongolia are rich in thermal power resources, while Sichuan, Yunnan and other southwestern regions are rich in hydropower resources. However, the proportion of mining power in the four provinces changes with the seasons. For example, when the southwestern region enters the water harvesting period starting from April every year, the share of thermal power mining is significantly worse than that of hydropower.
For a long time, these two regions have been the mecca of mining in China. Until 2020, at the United Nations General Assembly, China pledged to strive to peak carbon emissions by 2030 and achieve carbon neutrality by 2060.
In front of this environmental goal, control energy consumption and reduce thermal power into the focus of work. As early as March this year, the Inner Mongolia Development and Reform Commission issued an announcement that the comprehensive cleanup and shutdown of virtual currency mining projects, all out by the end of April 2021, and new virtual currency mining projects are strictly prohibited.
At that time, domestic miners and mine owners felt the pressure.
Some miners chose to wait and see, expecting a more detailed policy document to come out; some small cost miners commissioned miners to resell their mining machines, while some capable and resourceful miners and mine owners chose to relocate their mining machines to the southwest of the country or some low-cost areas abroad.
Considering the uncertainty of the subsequent domestic regulatory policy and the replacement of the Southwest water period and dry period, some mining companies are in place and choose to migrate the mine directly to the sea, which, in particular, relocated to the cheaper electricity rates in Central Asia and North America.
The “coveted” computing power industry? Musk and North American miners have been getting very close lately
While the Chinese government is trying to crack down on bitcoin mining and mining companies are being forced to go offshore, Musk across the ocean is starting to make things happen.
In a social media post yesterday morning, Musk said, “Talked to some North American bitcoin miners who have committed to posting current and planned renewable energy consumption, and are calling on miners around the world to do so. This could have a future.”
(Photo credit: Twitter screenshot)
Shortly after Musk’s post, MicroStrategy CEO Michael Saylor then retweeted the post and revealed that he hosted a meeting last Sunday with both Musk and North America’s leading bitcoin mining organizations in attendance. These institutions agreed to form the Bitcoin Mining Council to increase transparency in energy consumption and accelerate sustainability activities on a global scale. These mining companies include Argo Blockchain, Galaxy Digital, and others.
Once the news was fermented, bitcoin prices moved higher, once approaching the $40,000 mark, back up more than $6,000 from the intra-day low, a 24-hour gain of nearly 20%.
In response to the current contrast between domestic bitcoin mining experiencing strong regulation and foreign countries setting up bitcoin mining committees led by Musk, there is a lot of debate.
Some say that a battle for the dominance of global bitcoin arithmetic is kicking off; others say that this wave of arithmetic migration is going to come faster than expected, after all, the spearhead is pointing directly at Chinese miners ……
Weixing Chen, founder of Pan City Capital and Fast Taxi, points out that “Bitcoin mining is just a way to motivate users to participate in bookkeeping when Satoshi Nakamoto designed the system in the first place, not mining. If Bitcoin succeeds, this so-called “mining” is the financial bookkeeping power of the digital world, which will evolve into a power similar to the enhanced swift, which will be responsible for clearing not only the reserve currency, but also most of the core human assets …… “
The researcher of OUKE Cloud Chain Research Institute said in this regard: “The global bitcoin mining arithmetic is currently undergoing a change, with North American mining companies led by Musk competing for the right to keep track of bitcoin mining on a global scale. In the context of increasingly stringent regulation, China will likely no longer be the home base for bitcoin mining, and its pre-existing advantages of chips, mining machines, pools, and mining farms accumulated over the past decade or so will be weakened or even replaced.”
Consequences: Does the drop in arithmetic power affect bitcoin prices?
It is worth mentioning that this miner migration out of the sea, the outside world is not only concerned about the transfer of mining bookkeeping rights, but also more concerned about the impact on bitcoin caused during the network-wide arithmetic power redistribution, especially the price.
Under heavy pressure, the global arithmetic power pattern redistribution is an indisputable fact, during this period, bitcoin mining arithmetic power is bound to produce fluctuations.
According to OKLink, the average arithmetic power of the BTC network has declined in the past week. As of this writing, the average arithmetic power of the network is 145.85EH/S, down 20% from the high of 180.17EH/S on May 12.
Comparing the recent market performance, many people believe that this round of coin price decline might be caused by the drop in Bitcoin’s arithmetic power. But this argument doesn’t seem to hold water.
What exactly is the connection between computing power and coin prices?
As we all know, an increase in bitcoin’s network-wide arithmetic power means that more people are involved in mining, or that miners have more and more mining machines. Based on this, we can also see the main factors that affect bitcoin’s network-wide arithmetic power, namely the price of mining machines, mining machine technology, and miners’ enthusiasm to participate in mining.
As we can see, the coin price cannot have a direct impact on the arithmetic power. However, it is worth noting that as the price of the coin rises, the enthusiasm of miners to participate in mining will become higher, and the enthusiasm of miners will fuel the climb in arithmetic power. However, there is some time lag in between.
So, does the size of the arithmetic power determine the rise or fall of the price of a coin?
Here, we can think back to the arithmetic war between BCH and BSV: at first, both sides competed for arithmetic power, but the price of the two forks did not skyrocket endlessly. As you can see from this case, arithmetic power does not determine the price of a coin. Moreover, according to the Bitcoin difficulty adjustment settings, the total amount of bitcoins mined in a fixed period of time is constant, and an increase in arithmetic power will not have any effect on its output, nor on the price of the coin.
In short: arithmetic power does not affect the price of a coin, but the price of a coin affects arithmetic power.
However, there was some concern that in the extreme case of a country’s computing power suddenly shutting down, the computing power would drop dramatically, and Bitcoin’s difficulty adjustment mechanism would not be able to react quickly enough to slow down the speed of the blocks. However, Bitcoin is now a global public facility with nodes all over the world, and as a peer-to-peer distributed system, its biggest feature is that it is “resistant to single point of failure”.
Therefore, this worry is not necessary, you know, when the arithmetic power drops significantly, it means that the competition between miners is reduced, mining revenue is higher. At this time, more and more miners will enter the industry, even if some “energy ratio” behind the mining machine will be back on the shelves. So, even if this extreme situation happens, it will not have a big impact on the stability of the Bitcoin system.
Nowadays, with the development of technology, human’s environmental awareness is also strengthening, in terms of bitcoin mining, both domestic and foreign miners, migration between regions does not solve the fundamental problem, the essence is to find the ultimate solution, that is, to find clean energy for mining.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/the-de-chinaing-of-computing-power-is-intensifying-and-bitcoin-mining-bookkeeping-is-moving-to-north-america/
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