According to IP addresses from so-called hashers that used certain Bitcoin mining pools in 2021, the majority of Bitcoin mining occurred in the United States.
This is most likely related to global energy prices: Germany’s electricity costs were over tenfold those of, say, China — the country that was for a long time the world’s largest crypto miner until late 2021.
Bitcoin requires energy for hashing, or the computing power required to build the blockchain on a personal computer. To put it simply, the more hashing that occurs, the more Bitcoin is mined.
These diagrams attempt to illustrate where the majority of this hashing — and thus Bitcoin mining — occurs. Take note that mining statistics differ from those for Bitcoin trading: Africa and Latin America expressed a greater interest in purchasing and selling BTC than some developed economies.
How much Bitcoin is mined each day in each country?
Due to the cryptocurrency’s design emphasis on privacy, there is no way to determine how many new coins are created from which location — which is why the figures provided here refer to PC processing power rather than Bitcoin.
There are figures for Bitcoin’s current and maximum supply, but they exclude the location of the currency’s mining.
The closest figure would be to look at the hash rate from so-called mining pools — places where miners can dig for Bitcoin — and how much they hashed in the last 24 hours.
In 2021, the world’s top Bitcoin mining pools all came from China, with five pools being responsible for over half of the cryptocurrency’s total hash.
Can Bitcoin mining be profitable?
Bitcoin mining could lead to profits for some, but there are several things to consider. Mainly, the maximum supply of Bitcoin is getting closer, so the algorithm requires more and more processing power.
This is reflected in the steady growth of BTC mining difficulty — a metric that looks at how much effort miners are putting in to get a Bitcoin.
Indeed, mining firms bought so much hardware capable of mining that prices of these mining rigs grew by roughly 10 percent each week in 2021 as supplies worldwide had sold out.
2021 has been a year of growth for Bitcoin and other cryptocurrencies. This global cryptocurrency boom has prompted hundreds of mining companies to seize the opportunity and establish farms in countries with more favorable operating conditions.
Cryptocurrencies, in general, are not just enticing investments for investors and traders. They are also an industry that attracts miners of all sizes, eager to profit from the fact that the price of bitcoin has more than doubled in less than a year.
China was the epicenter of global bitcoin mining between 2019 and the first quarter of 2021. Until May, the Asian behemoth tolerated bitcoin mining, which has grown to previously unimaginable levels in recent years. The red dragon eventually absorbed more than 75% of all bitcoin mining activity worldwide.
However, this came to an end when China’s communist government decided to establish its own CBDC or central bank currency. Since then, bitcoin mining has shifted to other parts of the world with more lenient regulations and an abundance of cheap energy.
Countries with the highest Bitcoin hash rates
Although it is not easy to determine where Bitcoin is most exploited or how many cryptocurrencies are created because it is a semi-private activity.
The only way to know where there is more activity related to the mining of the largest cryptocurrency in the world is through the hash rate.
This metric enables the total capacity of the combined network used to mine and process blockchain transactions to be determined. By examining the hash rate, it is possible to determine which countries have the most ASIC processing power and thus the most mining companies.
The following is a list of the top eight nations that mined the most Bitcoin in 2021, excluding China. The Cambridge Bitcoin Electricity Consumption Index is used to compile this list.
The University of Cambridge clarifies, however, that the information provided is based entirely on a sample of data from geolocated BTC mining facilities collected in collaboration with various mining pools.
China
Since 2019, this country has maintained the global mining leadership, accounting for 75.53 percent of all global activity, according to Statista data. It maintained these levels of exploitation until October 2020. From then on, mining began to decline gradually until it reached 50% in April 2021, when it was surpassed by the United States.
Prior to China’s massive crackdown in May, the global hash rate reached approximately 180 million terahashes per second. China was the largest source of hash power. Two-thirds of the world’s bitcoins were extracted in that country, using approximately 86 terawatt-hours (TWh) of electricity.
While bitcoin mining activity in China continued to fall significantly from the end of 2020 to the beginning of 2021 due to the persecution of mining and all cryptocurrency-related operations, activity increased in the United States.
Chinese miners chose to relocate to areas and countries where governments and regulations provided greater assurances for the development of this activity. Additionally, electricity rates in these countries are more profitable for bitcoin mining.
Subversive mining
However, dozens of miners have been trapped in China and have since disappeared underground. Those with greater financial resources and foreign property were able to evade the authorities’ ruthless persecution that began in June 2021.
Those who remained dismantled their farms and operate in small units scattered throughout the country to remain undetected. Particularly in regions with significant infrastructure for electricity generation, such as the Sichuan hydroelectric dam in the country’s south.
At the moment, there is no precise information about bitcoin mining in the country. However, it is believed that covert mining occurs via virtual private networks. In this method, government rules are circumvented, giving the impression that the computers are located in another country.
United States of America
The recovery of mining activity in the United States was critical to bitcoin’s recovery following the Chinese mining chase. Although the American miners in the Asian country had been preparing for what appeared to be an impending disaster.
Thus, while the price of bitcoin remained low, they were adjusting the mining equipment’s housing conditions. They invested heavily for years to build massive infrastructures for the American mining firm.
According to data from the Cambridge Center for Alternative Finance (CCAF), the US absorbed the majority of the Chinese miners who fled. It was the world’s first economy and quickly developed into a global bitcoin mining haven.
The academic institution’s study details the global evolution of the network’s hash rate. Emphasizing the advancement of the United States of America, Russia, Malaysia, Kazakhstan, and other countries, as well as the fall of China, which began in May of this year.
By April 2021, the United States had already surpassed the global hash rate of 16.85%, according to Statista data. However, it increased to 35.4 percent in just four months and has continued to rise.
Texas stands out among the states with the highest levels of bitcoin exploitation. The southern state is rumored to be on the verge of becoming the global capital of bitcoin. The state has an excellent infrastructure and an adequate supply of electricity. And it is there that the interests of dozens of cryptocurrency investors and aspirational young oil executives collide.
Kazakhstan
The former Soviet republic is ranked second in the world currently in bitcoin mining, behind the U.S. Kazakhstan had an 18.1 percent hash rate in August 2021, according to the Cambridge Center for Alternative Finance.
The location of Kazakhstan, a country of 18.75 million people located in Central Asia that borders China and Russia, along with the facilities offered by the government, caused Chinese miners to move their mining farms en masse.
However, the country is currently experiencing an energy crisis as a result of heavy mining activity. Due to a lack of electricity, the population is constantly subjected to blackouts. National energy demand increased by 8% this year, exceeding the annual average of 1% or 2%.
Several cryptocurrency mining companies in southern Kazakhstan have been forced to shut down or relocate their operations. As a result, many miners no longer regard this country as a viable location for bitcoin mining.
The national electric power grid’s infrastructure is also insufficient. Transferring energy from the most energy-dense regions in the north to the most energy-dense regions in the south is not simple.
Since 2019, the government has invested millions of dollars to support BTC mining, which is primarily based on coal combustion. However, this was insufficient. Now, lawmakers are calling for stricter mining regulations to avert the collapse of the country’s electricity system.
The government anticipates earning close to $ 1.5 million in bitcoin mining tax revenue over the next five years. However, the energy crisis has compelled authorities to consider alternative means of compensating for the electricity shortfall. One of them is the importation of Russian electrical energy.
Russia
The Russian Federation was another country that benefited from China’s anti-bitcoin mining campaign. Russia’s proximity to China and abundant inexpensive energy resources (oil, coal, and hydroelectric power) facilitated the relocation and expansion of mining operations this year.
According to the CCAF, the country ranks third globally in bitcoin mining with 11.23 percent. Following China’s prohibition of this activity, the city with the highest concentration of bitcoin farms is Irkutsk in Siberia.
This region is abundant in natural resources and has enormous hydroelectric potential, which could be used to power the computers used to mine bitcoin. Indeed, only about 20% of installed power generation capacity is currently being used.
As a result, Russia is an ideal location for bitcoin mining operations. Additionally, cold weather aids in the conservation of energy resources used to cool interconnected equipment that operates 24 hours a day.
Bitcoin mining has enormous growth potential in Russia. The availability of inexpensive energy, combined with the Russian government’s willingness to host large mining operations, is a plus for any miner looking for a suitable location.
On the other hand, Russia’s prohibition of BTC as legal tender has not stymied the growth of mining activity. The government of Vladimir Putin is in the process of issuing the digital ruble in this vast country that spans 17.13 million square kilometers.
Canada
According to data available until July of this year, this is where 9.55 percent of the entire global bitcoin hash rate is concentrated. As a result, Canada will rank fourth in terms of bitcoin mining in 2021.
Both Canadian and Chinese mining companies have sheds and equipment in this country. Between April 2019 and April this year, Canada’s share of the hash rate increased from 0.8 percent to 3 percent, while China’s share decreased.
Quebec is the province where bitcoin is most widely used in Canada, owing to its abundant energy resources and favorable climate. Canadian miners have admitted to receiving joint venture offers from Chinese firms in recent months.
Cryptocurrency entrepreneurs in Canada primarily mine bitcoins using hydroelectric power. This has enabled them to avoid criticism for excessive emissions and electricity consumption, while also doubling their profits.
Iran
The Iranian bitcoin mining business accounts for between 4.5 percent and 7 percent of the global total bitcoin hash rate. Since 2017, as the country’s mining sector has risen substantially, the Ayatollah administration has increased oversight of mining activity.
Despite the fact that the Iranian regime tolerates this activity because it generates tax revenue, worries about rising energy use have arisen. The authorities suspect that unlawful mining has evolved, with operators rigorously evading payment of applicable taxes and charges.
In the country, legally operating bitcoin mining companies are assisting the government in developing a regulatory framework. This way, they hope to avoid illegal mining. According to the Iran Mining Association’s data, approximately two-thirds of BTC mining in Iran is illegal.
Malaysia
Mining activity has also increased significantly in this Southeast Asian country in recent months. According to data from the Cambridge Center for Alternative Finance, Malaysia has been expanding its mining network since April 2021.
By July of this year, the country had a 4.5 percent monthly global bitcoin hash rate. Some of the miners who abandoned their activities in China took sanctuary in Malaysia, which aided the spread of the activity.
Since then, the country’s annual energy consumption has climbed relentlessly. Right now, it’s over 147 terawatt hours. However, illegal mining has increased, compelling the government to take drastic measures.
Malaysia’s government is persecuting thousands of unlicensed miners. The government has seized thousands of pieces of mining equipment from clandestine farms and can now sell them for scrap. The remainder of the seized equipment and encryption systems were auctioned.
Not only do illegal miners not pay taxes to the government, but also steal electricity to operate their equipment. To prevent this, police conduct ongoing raids in areas where they suspect mining equipment is being operated illegally.
Germany
The largest economy in Europe is also one of the fastest-growing in terms of bitcoin mining. Germany’s hash rate has also increased significantly this year. According to CCAF data, the country consumes 4.4% of the network’s total power.
Although it is unknown with certainty whether the capacity of Germany’s operational mining equipment has increased. According to a report from the University of Cambridge, recent increases in the country’s hash rate could be a result of miners utilizing VPNs or proxy servers.
In Germany bitcoin mining must pay income tax. On the other hand, if users buy any cryptocurrency and keep them stored for a year, they do not pay any tax. Nor if the earnings per sale are less than € 600 per year.
Ireland
The case of Ireland is similar to that of Germany. The increased hash rate is believed to be the result of the use of VPN filters to evade the actual location of the mining equipment’s IP address.
A hash rate of 4.6 percent is indicated on the Bitcoin Cambridge Electricity Consumption Index map. However, to attract foreign investment, the Irish government has been supporting blockchain-related activities since 2018.
Several Chinese mining companies have relocated to Ireland, which has more palatable state regulations.
the countries that mined the most bitcoins in 2021 are not necessarily the ones where the cryptocurrency has been most positively received and adopted by their governments.
Summary
The majority of Bitcoin mining occurred in the United States in 2021. Africa and Latin America expressed a greater interest in purchasing and selling BTC than developed economies. Germany’s electricity costs were over tenfold those of, say, China — the world’s largest crypto miner. China was the epicenter of global bitcoin mining between 2019 and 2021. Since then, mining has shifted to other parts of the world with more lenient regulations.
The only way to know where there is more activity related to the mining of Bitcoin is through the hash rate. Prior to China’s crackdown in May, the global hash rate reached approximately 180 million terahashes per second. Two-thirds of the world’s bitcoins were extracted in China, using approximately 86 terawatt-hours (TWh) of electricity. The United States was surpassed by China as the nation that mined the most Bitcoin in 2021.
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