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China has all the hash in the hands

An absolute majority of the hash rate of the Bitcoin (BTC) network is generated by Chinese miners.

14.Dec.19 9:49 PM
By Shawn Highstraw


China has all the hash in the hands
A large majority of the hash rate of the Bitcoin (BTC) network is generated by Chinese miners. This is the conclusion of a new investigation by the investment fund CoinShares that published the report of that investigation on 12 December.

According to CoinShares, around 65% of the hash rate would be generated by Chinese miners. The hash rate is the number of hash codes that the Bitcoin network can spit out per second. It can be seen as the security of the network, which is now 65% in the hands of the Chinese miners.

In the previous CoinShares report, published last June, this percentage was still 60%. In short, there are some concerns among the Bitcoin fans about the increasing centralization of the network.

The reason that so many Chinese bitcoin mines has to do with a number of factors. For example, China is the home country for a number of mining equipment manufacturers such as Bitmain and Canaan, making mining equipment cheap. In addition, there is an abundance of cheap energy in China, mainly from hydroelectric power stations. It is therefore not surprising that within China, 54% of miners are in Sichuan province, where a lot of electricity comes from hydroelectric power stations.

The remaining 35% of the hash rate is generated in countries such as Iceland, Norway, Canada, Russia, Kazakhstan and Iran. In the majority of these countries, miners also use renewable energy. CoinShares also reports that they estimate that much of the mining is done with such "green" sources:

We estimate that renewable energy sources that power the bitcoin-mining network account for 73% of the total, making bitcoin-mining more sustainable-based than almost any other large-scale industry in the world.

However, this does not alleviate concerns about centralization. In a response to Cryptobriefing, mining expert Kristy-Leigh Minehan explains:

Centralization of the hash rate threatens the ultimate promise of cryptocurrency networks: that no party or group has control over the ledger or the flow of transactions, [] Natural disasters or state-level threats can cause chaos in the network, either due to increased block times, transaction costs or transaction censorship at state level.

The above percentages may change in the coming period due to developments such as the opening of the world's largest mining farm in Texas. However, it recently became clear that mining manufacturer Bitmain will be applying a new strategy in the run-up to the upcoming halving.

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