China retains crypto-mining lead defying nationwide ban and crackdown

China is the world’s second most prolific miner of cryptocurrency revealed the latest report on hash rate data. The country’s crypto-miners are behind only those operating from the United States of America.

Chinese cryptocurrency miners are defying a nationwide ban and even risking severe jail time to mine digital tokens. The country’s miners seem to have a relentless appetite for generating virtual currency through energy-intensive mining processes, indicated a report from the Cambridge Centre for Alternative Finance (CCAF).

China has repeatedly banned all activities pertaining to cryptocurrency mining and trading. This means any person or even agency found to be dealing in crypto tokens is liable for persecution and jail time. Simply put, cryptocurrency and all associated activities are essentially deemed illegal in China. The ban and the subsequent stringent crackdown did bring down the mining activity. However, the reduction seems to be temporary, indicates the report:

It is probable that a non-trivial share of Chinese miners quickly adapted to the new circumstances and continued operating covertly while hiding their tracks using foreign proxy services to deflect attention and scrutiny. As the ban has set in and time has passed, it appears that underground miners have grown more confident and seem content with the protection offered by local proxy services.

According to the report, the USA is home to 37.84 percent of mining capacity. China is in the second position and accounts for 21.11 percent of crypto mining. Kazakhstan is at 13.22 percent and Canadian miners contribute 6.48 percent.

Cryptocurrency mining activity is ascertained from “hash rate”, which is essentially the rate of processing, measured in Exahashes per second (EH/s). The Peak global capacity of 248.11 EH/s was reached in February 2022, when US capacity hit 70.97 EH/s.

From the latest report, it seems the primary reason behind the rise and fall of mining capacity isn’t the country’s regulation. The main influencer seems to be the availability and supply of cheap electrical power to drive the power-hungry crypto-mining computers.