The harsh crypto crackdowns in China have caused an unprecedented movement of Bitcoin mining operations, that will restore the hash rate that was lost, experts say
An unusual migration wave is sweeping through North and South America, Europe and Central Asia, with the winner in popularity among the movements, as well as their respective impact, not yet quite determined. After China’s latest move to ban crypto mining in Sichuan, it became clear that a reduction of carbon emissions was not the primary objective of the anti-crypto policies, as the province stood out with clean hydropower fuelling the blockchain mines. It seems, that China’s ambitions to dethrone the Dollar as world reserve currency set up the urge to act upon the immense popularity of DeFi in the country.
The formerly biggest provider of hash rate in the world, has officially seized to generate crypto. But the miners are still there. While the vanished mines were detrimental to the Bitcoin ecosystem and one of the main reasons for the big price dip, cutting hash rate distribution nearly in half, the market will not give up because of a single autocratic government. Part of the immediate aftermath was a significant rise of mystery hash rate, that was generated in unregistered and untraceable pools. Mystery hash is now the tenth largest pool, however it did not in itself compensate what is lost.
Another, more straight forward, but nonetheless unique and interesting phenomenon will however be capable to restore the lost hash-rate in the very near future, and that is simply the relocation of Bitcoin mining to other countries. North American governments are providing incentives; however Europe, Latin America and Central Asia are attractive destinations as well.
It is estimated that the entirety of lost hash rate will return within the next 12 months, especially since the reduced mining difficulty has additionally boosted the arrival of many newcomers in the mines.
Of the lost hash rate, about a quarter is expected to migrate to North America, and another quarter might be generated in Central Asian countries like Kazakhstan. The reason Central Asia is expected to have such a fair share of the hash rate compensation is extremely low prices of electricity compared to other regions of the world. Central Asia and North America both have very crypto friendly environments, with Texas being the number one destination in North America. The rest is estimated to be distributed throughout the rest of the world, with Europe being a fairly unpopular destination, as most governments impose taxes on crypto assets too high in international comparison.
The redistribution of smaller mining centres around the world is thought to be beneficial for DeFi in the long term. Having mining operations under several different regulatory frameworks ultimately creates a less centralised ecosystem.
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