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China Gets Wrecked! Who Will Take The Bitcoin Mining Throne?

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China Destroys 10% of the Global Bitcoin Mining Hashrate

epa06062677 (06/26) Tibetan Bitcoin mine manager Kun walks in between aisles of mining machines in a Bitcoin mine in Sichuan Province, China, 26 September 2016. Kun is the mine’s manager as well as one of its investors. He learned about Bitcoin through a friend and started investing in 2015. China, the world’s leader in Bitcoin mining, is dominating both the currency’s generation and the global trade in the currency. Sichuan has become known as ‘the capital of bitcoin mining’ as entrepreneurial Chinese set up ‘mines’ there due to its abundance of hydropower, perfect for the high electricity needs of the large number of computers required for Bitcoin mining. Bitcoin mines are buildings with warehouse-like structures equipped with massive numbers of microprocessors with which ‘miners’ solve complex math problems and are rewarded in the digital currency. The industry exists in a legal gray zone in China, and the miners in this story, concerned about attention from the government, asked not to have their full names or the names of the villages where their mines are located mentioned in this story. EPA/LIU XINGZHE/CHINAFILE ATTENTION: For the full PHOTO ESSAY text, please see Advisory Notice epa06062671

The Chinese provincial government of Sichuan has stamped out 10% of the global Bitcoin hashrate due to, as they announced, illicit cryptocurrency-related activities.
According to Cambridge University estimates, the province of Sichuan is responsible for almost 10% of the global Bitcoin hashrate. As a comparison, this single Chinese province has more mining power than then the entire United States or Russia. However, it is unsure what will now happen to the miners in this province.

What can we expect?

It’s not clear whether the recent issues will effectively destroy mining in Sichuan, as China’s crypto community was always strong, even despite governmental constraints. With that being said, many believe that, even though Chinese miners were never felt “comfortable” and “safe” when mining, this event has made the situation the worst it has been.

The question we have to ask is: Who will mine if the Chinese government shuts down Sechuan miners?

Philip Salter, Genesis Mining head of operations, said that the main advantage of mining in China is cheap production costs, but that it doesn’t come without disadvantages. The main disadvantage of mining in China would be that they use coal to create energy, which makes operating costs not so good.

People started speculating on who will pick up the slack: The big Sechuan miners by moving to other provinces or some other mining power that will come from the western part of the world. We have seen mining giants such as Bitmain creating facilities in western countries, so it might not be too far-fetched to believe that the era of China-dominated mining market might come to an end.

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