There Are Still Underground Crypto Mining Activities Despite The Ban From The Chinese Government

There are still Chinese underground crypto mining activities

China banned any attributes related to Bitcoin, the world’s largest cryptocurrency, last year. China ordered banks to stop aiding transactions and announced mining prohibitions in June 2021. China’s percentage of global Bitcoin mining has dropped to zero although the country accounted for nearly three-quarters of all Bitcoin mining in September 2019, according the Cambridge Bitcoin Electricity Consumption Index (CBECI).

Notwithstanding China’s official restrictions, data from the Cambridge Bitcoin Electricity reveals that China’s “underground” Bitcoin hashrate reached 22% of the world’s total hashrate in January 2022, following a government crackdown in 2021.

It appears that Bitcoin mining has evaded the ban.

China’s “underground” Bitcoin hashrate increase outpaced Kazakhstan’s, coming in second only to the United States’ 37.8%.

“The data strongly suggests that significant underground mining activity has formed in the country. Access to off-grid electricity and geographically scattered small-scale operations are among the major means used by underground miners to hide their operations from authorities and circumvent the ban,” CCAF stated.

Between September 2021 and January 2022, Chinese traffic accounted for around 20% of Bitcoin’s global hashrate. The brief pause caused by the quick rebound in Chinese traffic resulted in miners going underground.

“It is probable that a non-trivial share of Chinese miners quickly adapted to the new circumstances and continued operating covertly while hiding their tracks using foreign proxy services to deflect attention and scrutiny.”

“As the ban has set in and time has passed, it appears that underground miners have grown more confident and seem content with the protection offered by local proxy services.”

Mining operations quickly recovered after demonstrating practically no activity in August 2021, reaching more over 30% of the global Bitcoin hashrate. Other places, however, took advantage of the chance to welcome the “exodus” of miners. According to the CBECI, Kazakhstan’s share surpassed 18 percent in August 2021.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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