This Industry Is Reportedly Exploding in North America After Chinese Crackdown

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The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

For years China was the indisputable king of Bitcoin mining.

One of the keys to industrial capacity is access to abundant energy, and China has developed a massive energy infrastructure — one that has facilitated its rapid industrial and commercial growth. This energy, thanks to abundant coal deposits in Northern China, has been cheap and plentiful. Recently, amid complications COVID-19 has presented, this has been complicated with shortages and blackouts, but the fact remains that, historically, China has been rich in energy.

A fundamental key to Bitcoin mining is access to cheap energy. Add in ready access to cheap tech manufacturing centers, and China was well poised to dominate Bitcoin mining. In fact, Chinese miners accounted for roughly 70% of the global hashrate for years.

This all changed when the Chinese government took a tough regulatory stance toward the industry. After a wave of crackdowns, China’s hashrate — and the world’s — plummeted. The power of the global network was cut in half in a very short period. Many felt this spelled bad news for cryptocurrency.

But since these developments last May, the global network has already recovered. It has surpassed the peak hashrate attained before the Chinese crackdown. This recovery has largely come from North America, which has supplanted China as the world’s mining epicenter. According to the Cambridge Bitcoin Electricity Consumption Index, as of the end of this summer, North America accounted for roughly 51% of the global hashrate.

This has largely been led by the efforts of U.S. mining companies like Hut 8 Mining Corp. HUT, Marathon Digital Holdings Inc. MARA and Riot Blockchain Inc. RIOT. These companies and their competitors have raised large amounts of capital to secure land near cheap energy sources in the U.S. and Canada.

These operations are sometimes placed near plants, often hydroelectric dams, that produce more energy than the grid can use and use what are known as “stranded” energy assets. As is often the case with modern energy systems, the issues usually lie in transmission and distribution rather than production, and Bitcoin mining can help use power that otherwise might be wasted.

OLB Group Inc. OLB, is another example of a mining company but with an environmentally conscious twist. Originally established in eCommerce, OLB is a newer player in the space dedicated to near zero-carbon operations and generating optimism for Bitcoin’s future and image. Bitcoin can likely only benefit from more U.S. companies dedicated to making it more sustainable and growing responsible energy usage within the industry.

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.