How China’s Crypto Ban Could Help The U.S. Become The New Mining Hub

When China announced a crackdown on cryptocurrency mining, it sparked an immediate search for the next cryptocurrency mining hub.

So, how could China’s crypto ban help the US become the new mining hub?

Why Is China Cracking Down on Mining?

China has had a complicated relationship with cryptocurrency. While it was quick to clamp down on crypto transactions, in the background, it steadily grew to become the world’s crypto mining hub.

Drawn by extremely cheap energy prices, miners built huge mining networks, some of which have grown into massive corporations. At one point, around 70% of global bitcoin mining was centered in the country, but the recent China crypto ban has changed all that.

So, why has China banned bitcoin?

Mining requires a lot of energy to power the computing equipment. In the rainy season in the south of the country, this isn’t a problem as hydropower stations have a surplus of energy they practically give away.

Outside of the rainy season, it’s a very different story though and the desperate need for energy sees miners turn to coal power. This doesn’t fit well with the Chinese government’s environmental policies, and this likely played a part in the decision.

The other major issue is control.

Cryptocurrencies aren’t regulated by any one country and this is a major issue for some governments. This is likely why China had previously banned crypto transactions, and it got to the point where they couldn’t continue to turn a blind eye to mining.

The result: a China crypto ban that could make the US the new mining hub.

Why the US Is a Good Fit as a New Mining Hub

Not long after the China crypto ban was announced, Jiang Zhuoer, chief executive of BTC.TOP, which accounts for more than 18% of China’s bitcoin mining said, “next, we will mainly mine in North America,” on his Weibo social media account. “It’s not worth running the regulatory risk.”

In a flash, the focus of crypto mining was forced to shift from China.

Cheap power is still a key element for crypto miners, but it’s about more than just that, as the China crypto ban has shown. They also need a level of regulatory certainty.

China crypto ban - energy concerns

Miners can’t afford to wake up one day to find their industry is banned.

When choosing the next location for global mining hubs, the US ticks both boxes. Many states have favorable energy rates and the regulatory certainty that businesses need.

Different states have approached crypto mining in different ways, with some, such as Texas and Wyoming offering relatively relaxed regulations that allow miners to operate. As Texas governor, Greg Abbot tweeted, “it’s happening, Texas will be a crypto leader.”

Energy

Miners need access to cheap energy, but they also need it to be reliable. Few countries offer the well-developed electrical infrastructure of the US while also keeping energy prices low.

While the average electricity price in the US is $0.15 per kilowatt-hour, compared to $0.09 in China, that number drops to $0.11 in Texas and lower in other states. These prices also come with developed electrical infrastructures that bring more certainty to operations.

Regulatory Certainty

As China’s crypto ban has shown miners, regulatory certainty is important.

The US has a very different political system to China’s and this might offer miners added stability. Certain states have begun to recognize cryptocurrency in commercial law, giving miners a more stable platform from which to operate.

Energy Infrastructure

Energy infrastructure is also a vital considerations.

Mining networks need access to a huge amount of energy and this can put a lot of pressure on the local supply. If the energy infrastructure isn’t capable of meeting the demand, then this is going to lead to blackouts that affect the entire area.

Not only will this stop miners from operating, but it’s also going to cause big political problems that threaten the industry as a whole.

What’s Missing for the US to Grow Its Crypto Mining Industry?

There was a reason such a large percentage of crypto mining took place in China, so what was missing in the US?

The one obvious element that China has over the US is access to cheap labor. This is something that can only be overcome through improved efficiency, but the second element is something that can be a quick fix.

China’s mining networks have been able to scale so quickly because of speedy construction. Miners were able to move quickly and erect huge data centers in an instance, and with new technology, the same can be true in the US.

For example, BLOQCENTERs and BLOQPODs are specifically designed for crypto mining, allowing businesses to quickly set up and create an efficient mining environment.

How the US Can Continue to Grow Its Crypto Mining Industry

The US has many of the elements miners are looking for and in the wake of the China crypto ban, it’s been a popular destination. There was a reported 151% increase in the US’s share of world bitcoin miners between September 2020 and April 2021.

There are still hurdles for crypto mining to overcome though, and technology and innovation will have to play their part. One of the main concerns is the amount of energy mining uses, and this is a space where innovation is likely to occur.

Products such as BLOQPODs and BLOQCENTERs are already starting to fill this space. With an optimized setup, these facilities help mining centers run more efficiently and limit some of the drawbacks.

100% mobile, these pods can quickly create the ideal environment for mining, boosting productivity, and making the US an even more desirable mining hub.

Learn more about our bitcoin mining farms!