Russia lost its share in the mining market even before the sanctions

According to the Cambridge Center for Alternative Finance (CCAF), the leader in terms of mining volume remains the United States. They account for 37.8% of the total world hashrate.

In second place is China, which quickly restored mining activity, which collapsed to zero after official Beijing outlawed all mining pools. As of January 2022, it accounted for about 21% of the bitcoin (BTC) hashrate.

In third place is Kazakhstan (13.2% of the world hashrate). Russia is responsible for only 4.7% of the world’s hashrate and ranks fifth on the mining map, behind Canada.

The share of countries in the mining market. Source: CCAF

CCAF regularly aggregates geolocation data coming from partner mining pools, and on their basis forms its bitcoin electricity consumption index (Cambridge Bitcoin Electricity Consumption Index, CBECI).

See also: Mining under sanctions: migration and import substitution

Russia is losing ground

In July 2021, when China temporarily left mining, Russia’s share reached 12%. For a month, the country has almost doubled its mining capacity. However, the increase was short-lived. Already in September, the country began to lose ground, and by January 2022, Russia’s share reached a historic low for the entire time of statistics (since September 2019).

Despite the increase in global hashrate from 160 to 240 exahashes per second, Russia could not take advantage of the situation. The hash rate produced by Russian miners also decreased from 13.9 in August 2021 to 8.7 exahashes per second in January 2022.

Thus, Russia’s mining capacity began to decline even before the start of the geopolitical conflict and the imposition of sanctions against BitRiver, the largest mining pool in the country.

The lack of regulatory clarity and the central bank’s tough stance on mining have affected the sentiment of industry participants, prompting them to migrate to other, more favorable regions. The new challenges posed by geopolitical instability could accelerate this process.

About what experts think about the future of mining in Russia, read in the special material BeInCrypto.

How the world map of mining has changed

When Beijing declared a “crusade” against miners last year, many mining farms and pools across China were shut down. In the crypto space, the process of the “great migration of miners” has begun.

As a result, by July, mining activity in the country fell to zero. This situation was maintained until August, but the following month the miners of China again showed signs of life. According to researchers, about 22.3% of all mining capacities in the world are still located in the Middle Kingdom.

The United States benefited the most from the large redistribution of the market. They account for 37.8% of the entire mining industry, and the total capacity is 71 exahesh / sec. For six months, it has increased by almost 50%.

Kazakhstan occupies a confident third place with a market share of 13.2% and a capacity of 24.8% of exeches.

Iran has almost completely disappeared from the mining map. Its share for six months decreased from 3.8% to 0.1%. Such dynamics is associated with the aggressive position of the authorities, who accused miners of electricity shortages and constant blackouts.

Dynamics of hashrate by country. Source: CCAF

What’s happening in China

According to CCAF, in the Middle Kingdom “a powerful layer of underground mining activity has formed.” Such underground miners are represented by “geographically dispersed mining farms and pools with a small amount of operational activity.” In their work, they use “autonomous sources of electricity that are not part of the general energy system.”

According to CCAF analysts, the lull last summer was temporary and was necessary for industry participants in order to switch to the “gray mining” mode. “It took time to find existing and build new untraceable hosting services at this scale,” experts comment.

It seems that now the underground miners “have become more confident and quite satisfied with the protection offered by local proxy servers,” judging by the volume of their activity after the introduction of the ban on mining in the country.

As the industry source adds, they are also trying to diversify their locations in every possible way, use VPN services and try not to consume too much energy from one source so that energy companies cannot identify and track any suspicious activity.

Recently, the editors of BeInCrypto said that this year the indicators of the complexity of mining and the hash rate of bitcoin have updated the historical maximum. You can read about what these changes mean here.

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