Bitcoin mining has fully bounced back from the Chinese ban

Bitcoin mining has fully recovered from the Chinese crypto suppression that carried more than half the world’s miners offline virtually overnight earlier this year.

The recovery is measured by looking at the hash rate. Hashrate is a term used to define the computing ability of all miners in the bitcoin network. 

China had long been the heart of this industry, with past calculations indicating that 65% to 75% of the world’s Bitcoin mining occurred there.

But after Beijing dismissed the country’s cryptocurrency miners in May, more than 50% of bitcoin’s hash rate declined off the global network.

Bounce back of Bitcoin mining operations

As of Friday, data from Blockchain.com indicates that the network has fully lessened those losses. The network’s hash rate is up about 113% in five months.

Kevin Zhang of digital currency company Foundry said, “Bitcoin withstood a nation-state attack of China banning mining, and the network shrugged it off.” This helped bring over $400 million of mining equipment into North America.

The positive momentum in hash rate may indicate well for the price of the world’s most popular cryptocurrency, which is down 30% over the last month. China’s ban was a clear “buy” signal, just as it was with Google and Facebook before it, according to bitcoin mining engineer Brandon Arvanaghi, who now runs Meow, a company that enables corporate treasury participation in crypto markets.

Bitcoin’s sharp comeback 

When half the bitcoin network moved dark this spring, multiple experts said miners would come back online in North America. Numerous forecasts were also made about the timeline to revive the network to its earlier high.

No one from CNBC had an idea that the network would rebound back by the end of the year.

According to Zhang, the bitcoin network’s swift comeback came about because the U.S. applied the groundwork to become a new mecca for mining. Zhang says that in the States, there is a “huge appetite for growth, building infrastructure, and leveraging stranded power.”

Bitcoin Crash

Bitcoin crashed in 2017 and the bigger market entered a multi-year crypto winter. At that time, there was not much demand for giant bitcoin farms. U.S. mining operators witnessed their opening and hopped at the opportunity. This was done to deploy cheap money to build up the mining ecosystem in the States.

Companies like Core Scientific kept creating hosting space all through the crypto winter to guarantee the capacity to plug in new gear.

According to numerous sources, multiple miners who didn’t have the resources to resettle remained in China, shifting their operations underground. Some went “behind the meter,” pulling power directly from sources like hydro dams in the southern province of Sichuan. Others separated their mining operations into much smaller farms across the country that the authorities were less likely to notice. 

Whatever the cause behind bitcoin’s sudden bounceback, bitcoin miner Alejandro de la Torre — who has spent years minting crypto all over the world, including in China and most recently in Austin, Texas — tells CNBC that the bigger lesson here is the resilience of the global mining industry.

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