When it comes to crypto mining, and especially BTC mining, China is an undisputed world leader. Some estimates claim that Chinese mining pools control over 70% of the collective hashrate of BTC. Despite this, China threatened to ban crypto mining in the nation. One of their arguments was that crypto mining was consuming too much power. Despite regulatory uncertainty, crypto mining continues to thrive in China, what are some of the reasons?
Cheap Power
To carry out a mining operation, electricity costs are an important consideration. China has some of the cheapest electricity in the world. In most industrial regions of China, the power is sourced from hydroelectric sources or the government subsidizes it. As a result, mining in China is usually profitable even when crypto prices drop, which might cause miners in other nations to give up.
A lot of Coal
While coal is not a clean source of energy, it is also quite cheap. Thanks to the lax environmental laws in China, energy producers can burn as much coal as they want to produce cheap power. BTC miners utilize this power to make easy profits. In other nations, coal mining and coal plants are highly regulated, which causes the power costs to be higher.
Large Mining Pools
Major companies in the crypto world usually head mining pools. The larger a mining pool, the more hashrate it will have. This will ensure that it has a better chance of finding blocks. This reward is then divided amongst its members, according to the amount of hashrate they own.
The result is that many miners operating outside China have been signing on to Chinese mining pools due to how large they have become. Today, China is home to four of the five largest mining pools. These pools give BTC miners globally the assurance that they will earn a small but steady income even when the BTC prices fall.
What Would Happen if China Banned Crypto Mining
China has issued threats to ban BTC mining in the nation but it has thus far not taken any concrete measures. However, the possibility that China could ban all crypto mining has already caused jitters in the crypto world.
One of the effects has been that some of the biggest mining pools are moving parts of their operations out of China. Some are setting up operations in Mongolia while others are heading to Iceland. Both of these nations have very cheap electricity costs. For instance, Bitmain already has a mining operation up and running in Mongolia.
Could Bitcoin Survive a Chinese Mining Ban?
China plays an important role in the crypto mining industry. However, the Chinese government is renowned for issuing decisive and immediate action that affects the crypto sector negatively. Despite this, many experts believe BTC could survive a Chinese mining ban. If crypto mining is ever banned in China, it is likely there will be a temporary shakeup to the industry. However, the industry is quite resilient and it will likely move on without China.
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