Highest in 2 Years: 65% of Bitcoin Hash Power Is in China, Report Finds

Published on by Coindesk | Published on

Skeptics like economist Nouriel Roubin often claim there is a massive centralization of power among miners and the blockchain is not even close to decentralization and democracy.

The hashrate refers to the computing power dedicated to mine blocks and secure the network.

If a couple of big Chinese miners were to switch off, the hashrate will likely drop sharply, making the network less secure.

The majority of bitcoin mining power resides in China mainly due to natural factors.

"China is a large country and there are many poorly developed areas with low-price, abundant electricity, such as Xinjiang, Yunnan, Inner Mongolia and Sichuan. As we all know, electricity costs and mining machines are two important factors for mining costs, so mining companies and individual miners prefer setting up mines in China."

Half of the global mining power is located in Sichuan, which has an ample supply of cheap hydroelectricity.

Further, major improvements have been made in the mining hardware over the last year or so and most of that has been predominantly installed in China, according to CoinShare's Chris Bendiksen.

Bitmain is already building the world's largest bitcoin mining farm in Texas, which has abundant power resources.

Miners' willingness to use high-power mining machines and expectations of further price rally ahead of the May 2020 reward halving also upped the hashrate, according to RRMine analysts.

The halving will reduce the reward per block mined from current 12.5 BTC to 6.25 BTC. Miners would want to mine as many bitcoins as possible before the reward is reduced substantially in May.Further, RRMine analysts are expecting the price to peak and boost mining profitability ahead of halving.

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