Chinese Mining Pools Maintain Dominance Over Bitcoin Hashrate Despite Ban

Chinese Mining Pools Maintain Dominance Over Bitcoin Hashrate Despite Ban

CryptoQuant CEO Ki Young Ju has reported that Chinese mining pools control almost 54% of Bitcoin’s hashrate, despite the country’s official ban on crypto mining. Ju’s chart shows that over the past 12 months, Chinese mining pools have consistently contributed more than 50% of the Bitcoin hashrate. However, it is likely that these pools also include miners from other countries, combining computational resources to enhance mining efficiency.

Analysts suspect that the Chinese government may have secretly relaxed mining restrictions. Mathew Sigel, head of digital assets research at VanEck, suggested that China’s recent decision to stop publishing data on renewable energy usage might be part of a strategy to mine Bitcoin covertly. Pro-Bitcoin environmental analyst Daniel Batten argued that the so-called ban was never formalized in Chinese legislation and that many miners operate with government approval using clean, renewable energy. Batten estimates that over 15% of Bitcoin’s hashrate still originates from China.

While Chinese mining pools dominate hashrate distribution, the overall Bitcoin hashrate has been in decline, hitting new lows in recent months. According to the Hashrate Index, the Bitcoin hashrate fell below 560 EH/s towards the end of July, its lowest level in five months. This decline indicates that more miners are unplugging their machines due to reduced profitability, exacerbated by reduced block subsidies and the need to sell Bitcoin holdings to sustain operations.

VanEck’s report highlights that some miners are pivoting to providing power for artificial intelligence to remain profitable. Sigel noted an increase in Bitcoin miners selling their coins due to low profitability, with many reallocating power capacity to AI projects. Despite these efforts, selling Bitcoin might not suffice to prevent miner capitulation, especially if prices drop further. Ironically, miner sell-offs contribute to the downward pressure on Bitcoin prices.

    Newsletter | Every weekday

    Smart Central News Weekly Briefing

    Only top industry news of the week in your inbox