The era of China’s dominance over bitcoin mining may be coming to an end about eight years after the emerging economy took the lead.
“Around 60% of the mining machine sales in the past two quarters or so have been outside of China and mostly in North America,” Mustafa Yilham of Beijing based Bixin Wallet recently said, adding:
“As we start seeing more mining operations from North America, we will also start to see more US based mining pools.”
Just today the Nasdaq traded Marathon Patent Group Inc. and the Frankfurt listed DMG Blockchain Solutions announced they have entered a non-binding memorandum of understanding to form the Digital Currency Miners of North America (“DCMNA”), which will be a U.S.-based non-profit entity whose mission is to create a better mining environment for North American miners, to help improve their financial performance, and to create North America’s first cooperative mining pool.
Marathon said they are sitting on $217 million in cash raised last year for the 103,060 miners bought from China based asics manufacturer Bitmain, accounting for 10.36 EH/s, or some 10% of the hashrate, once fully deployed.
In addition the Frankfurt based Northern Data AG announced a $100 million order volume of ASIC chips that “corresponds to an additional capacity of more than 200 MW, which will be allocated to Northern Data’s up-to-five new Scandinavian and Canadian data center locations, among others. The expansion of these new HPC data centers is being accelerated due to the massive growth in customer demand.”
Bitcoin mining currently has become very profitable especially if renewable energy is utilized, like hydropower which for Europe can be plentiful in the Balkan alps.
Solar is seeing less uptake but the American desert is already starting to become a solar farm, with the needs of the bitcoin mining industry pushing some of these technologies, including semiconductors.
“Bitcoin mining over the next one to two years will be more decentralized compared to any of the previous years when mining became a large operation in China,” Yilham said.
Some of that may be due to the more oppressive environment in China where miners have been on edge since 2017.
“China’s Sichuan government has requested that hydropower stations suspend power supply to crypto mines from December 8th due to insufficient electricity consumption for industries and residents.”
That’s one of the latest report to come from China on a repetitive basis with the government there doing their best to express their hostility while also trying to not harm too much the bitcoin exporting industry.
The primary driver however is likely to be a shift in dynamics highlighted best by Iran recently passing a law to use bitcoin for imports.
That illustrates the potentially strategic importance of bitcoin mining with Russia being third just after China and the United States.
Americans and Europeans are beginning to re-appreciate the potential benefits of straight up mining bitcoin, over only buying it.
Thus a lot of money now seems to be going into western mining which can reinvigorate rundown industrial zones with new tech clusters that may appear like dirty mining, but can be very clean and very high tech.
Northern Data for example describes itself as a provider of high-performance computing (HPC) solutions in areas such as artificial intelligence, blockchain, Big Data analytics, IoT, rendering and now more and more bitcoin mining due to increasing demand.
Suggesting European or American miners are likely to be more datacenters that have heavy infrastructure to support bitcoin mining and thus can easily provide the capabilities for other computing intensive functions, like machine learning.
As such this is an industry that a smart government would want to attract because the second and third order effects can be immense due to the nature of bitcoin mining pushing the industry to lead in certain advanced computing areas.