Chinese Bitcoin miners continue to dominate the global network, maintaining control over more than 55% of Bitcoin’s mining capacity, despite the country’s strict ban on cryptocurrencies.
According to Ki Young Ju, the founder and CEO of CryptoQuant, Chinese mining pools still command a significant portion of the Bitcoin network. In a post on X dated September 23, Ju stated:
“Chinese mining pools operate 55% of the network, while U.S. pools manage 40%. U.S. pools primarily cater to institutional miners in America, while Chinese pools support relatively smaller miners in Asia.”
This situation is noteworthy given China’s comprehensive ban on Bitcoin mining and trading, which has been in place since 2021. The ban has led to a drastic shift in the mining landscape, yet Chinese miners remain a formidable presence.
Shifting Dynamics
While Chinese miners still hold a substantial share, the dominance is gradually shifting toward U.S. mining firms. This transition may be fueled by technological advancements and an increasing number of institutional investors in the U.S. market.
Despite the ban, technological innovation and the decentralized nature of cryptocurrencies have allowed mainland users to access the crypto market, leading to increased scrutiny regarding money laundering risks. In response, China is set to amend its Anti-Money Laundering (AML) regulations by 2025 to include cryptocurrency transactions.
Prominent scholars and financial experts involved in discussions on the revised AML regulations have indicated that the law will have a broad scope. This complexity may hinder the comprehensive nature of the draft, necessitating a phased approach to its implementation.
The new regulations aim to establish stricter guidelines to mitigate risks associated with cryptocurrency transactions. Since the blanket ban on crypto in 2021, which prohibited offshore exchanges from providing services and banned all mining activities, there has been an ongoing struggle to regulate access to the crypto market effectively.
On July 14, Mike Novogratz, CEO of Galaxy Digital, suggested on X that he had heard reports indicating that China might “unban” Bitcoin by late 2024, hinting at potential changes in the regulatory environment.
Recent Market Pressures
Bitcoin miners worldwide faced considerable challenges in August 2024, marking the lowest revenue month in a year. According to data from Bitbo, miner revenue dropped to $827.56 million in August, reflecting a decline of over 10.5% from July’s $927.35 million, although it represented a 5% increase compared to August 2023.
This revenue drop marked the worst month for Bitcoin miners since September 2023, when they earned $727.79 million, with Bitcoin prices hovering around $25,000 throughout that month.
In addition to revenue declines, the total number of Bitcoins mined also fell slightly. Approximately 14,725 BTC were mined in July, compared to 13,843 BTC in August, showcasing a trend of reduced output that aligns with the revenue downturn.
Despite regulatory challenges and declining revenues, Chinese miners continue to hold a significant position in the Bitcoin mining landscape. As the crypto environment evolves, the interplay between regulatory changes, technological advancements, and market dynamics will shape the future of Bitcoin mining.
