Crypto mining facilities: the world’s hot spots
By: Electric Cash
Tags: Cryptocurrency, Elcash, Crypto, Mining, Electric Cash

The economic landscape has recently experienced a profound shift in perspective. The rise of decentralized, digital ledgers is a technological innovation as life-changing as the World Wide Web. The industry is experiencing remarkable growth, with new coins and facilities created every year. But which of the world’s operations are the most successful?

A bit of history

At the outset, a handful of individuals used their personal computers to mine Bitcoin (BTC). In the search for more efficiency, miners tried various solutions. Graphics processing units (GPUs) turned out to be much more suitable. Soon, they were mainstream.

Miners started to focus their efforts on regions with cheaper electricity, though they remained globally decentralized. Eventually, the BTC hashrate increased and made this method of mining more difficult. Today, vast mining farms do the bulk of the work. These facilities use dedicated mining equipment such as application-specific integrated circuit (ASIC) machines, making it difficult for individual miners to compete.

Cryptocurrencies are globally decentralized. But is mining competition equally distributed?

The Red Dragon

The short answer is no. China was one of the first countries to recognize the potential in mining BTC. In recent years, it has been the industry’s unquestionable leader. In 2019, Chinese miners held around 65 percent of Bitcoin’s total hashrate. The reasons for this include early adoption, cheap energy and resources, and the computational power of their sizable mining pools.

A mining pool is a group of individuals who collaborate in the hunt for blocks. They combine their hash power, giving them a greater chance of success. The higher the combined hash power of the pool, the better the chance of finding a block. Large mining pools receive more consistent rewards. As a result, China’s mining pools attract users worldwide.

The most popular pools include F2Pool, Poolin, Huobi Pool, and AntPool. They are all primarily located in Beijing. But it might be surprising to learn that Beijing is not China’s most active crypto region. Thanks to the traditional form of mining, Xinjiang is one of the two leaders. The availability of cheap coal gives it the edge. A region known for its cuisine, Sichuan is now another hot spot for crypto mining. The region’s hydropower is a valuable commodity, making it cheaper to access cryptocurrency.

But who’s in second place?

Uncle Sam

Continuing a recent trend, China’s closest crypto competitor is North America. But this isn’t as exciting as it sounds. In the world of crypto mining, America is to China what Blackberry is to the iPhone. China has indeed lost ground in recent years, but the gap between the two competitors is still as vast as the Grand Canyon.

According to a recent report, China’s mining dominance has decreased to 55 percent. While this is partly because of the 11 percent growth experienced in the US, the current figures are conclusive. China still has around 55 percent of the world’s BTC hashrate distribution. That’s a massive 44 percent more than North America. So, can Uncle Sam rise to the challenge?

Making predictions for 2021, the same report presents four possible scenarios:

20 EH/s goes exclusively to North America, and no one else gains hashing power due to production or shipment delays. 100 EH/s demand is produced but supplied exclusively to North America. 20 EH/s goes to America as planned, and the remaining 80 EH/s distributes evenly to the rest of the world. 20 EH/s goes to America as planned, and the remaining 80 EH/s is allocated to China.

Only scenario two puts North America in first place on the leader board. However, since this report was published, China has decided to crack down on crypto mining. The country is trying to protect its fiscal system and meet its clean energy and reduced carbon emission goals. This could put an end to China’s global dominance. But the US still needs to purchase 630,000 ASIC machines to take advantage of events in China.

The supporting cast

While the battle between first and second place is not exactly close, the rest of the leader board is quite competitive. Russia, Kazakhstan, and Iran sit third, fourth, and fifth respectively. There is only one percent between each position. At nine percent, Russia is snapping at America’s heels. But Kazakhstan and Iran have plans of their own.

Russia

As in Sichuan, there is an envious amount of hydropower in Siberia. This is where the country is focusing its mining efforts. For many years, the city of Norilsk has been synonymous with nickel and palladium mining. This is about to change. Bitcluster, a Russian company, is making its own electricity to power its crypto operation. This is 25 percent cheaper than the national grid. They are also further reducing costs by using the climate to cool their machines.

Kazakhstan

Kazakhstan is far more reliant on its coal reserves. But although the energy is rather old-fashioned, its application is progressive. With coal being so readily available and cheap, the country is perfectly positioned to mine for cryptocurrency. Efforts here are on the increase. In 2020, Energix opened one of the largest crypto mining facilities in the world. Based in Ekibastuz, the site is expected to house around 50,000 mining rigs. At eight percent of the global BTC hashrate distribution, this should make Russia look over its shoulder.

Iran

Faced with recent sanctions, Iran has started looking for ways to remain internationally competitive. And it has found a solution in BTC. Crypto miners are a fickle bunch. They only go where the conditions are ideal. This is how Iran is making a name for itself in the crypto community. Just as miners were drawn to cheaper natural resources in China, they are now flocking to Iran. Moreover, miners are required to sell their mined bitcoins to the central bank. All of this is helping to secure Iran’s future.

Key takeaways

Modern technology touches every industry in the world. Its rate of development is transforming our operations more frequently than ever. For industries like crypto mining, the changes can be radical. However, shifting priorities also affect the future of cryptocurrencies.

ASIC machines are extremely energy-intensive and produce a phenomenal amount of heat. Environmental concerns are now forcing governments to re-evaluate their mining facilities. The future growth of crypto mining could depend on possible sanctions and innovations in energy and emissions.

Some countries might be slower than others to regulate crypto operations. This will result in a shifting power dynamic. Miners will migrate to those countries that are more receptive, thereby transferring the global share of BTC hashrate. But all is not lost. Mining facilities can avoid governmental sanctions and keep their miners by simply improving their emissions.

This is a difficult problem to solve. Crypto mining requires a vast amount of energy, which is difficult to gather with cleaner resources. However, many facilities are making progress every day. Bitcluster is using the Siberian climate to cool its machines. So, perhaps future miners will be confined to the least hospitable regions on Earth. But there are other forces at work.

Like China and Iran, many countries are now beginning to impose sanctions for an entirely different reason. Growth in crypto mining is having a direct effect on fiscal economies. If China limits the amount of crypto mining within its borders, North America could get the lion’s share of the global BTC hashrate. But this depends on environmental policies and innovations in the US.

One thing’s for sure. There’s never a dull moment in the world of cryptocurrency.

For a look at worldwide mining operations, check out this map.

Infographic: BTC hashrate distribution as of January 2021

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