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Bitcoin Miners Are Moving Out Of China

Over the past few weeks, Bitcoin markets have had to deal with a swarm of bad news coming out of China.

It started with rumors that miners in Sichuan had gone offline after the province limited energy-intensive industrial activities, such as Bitcoin mining.

Then came a joint statement by three of China’s top financial self-regulatory organizations reminding the public of the country’s 2017 ban on crypto assets. Then it was reported that for the first time, the Chinese State Council, headed by President Xi Jinping’s top economic advisor, was cracking down on mining.

To top things off, last Sunday the Chinese state-run news agency Xinhua published a negative article on crypto assets, denouncing their risks relative to traditional investment tools.

While there have been multiple factors contributing to this sell-off, one thing is undeniable: there is something brewing in China. Whatever it is, this series of events has led market participants to fear for Bitcoin’s future, especially as it relates to mining.

To get to the bottom of this, let’s follow the money.

The great thing about Bitcoin’s financial transparency is that it enables us to evaluate how miners are responding to all of this, in realtime. But before we delve into the actual mining data, it’s important to do a quick recap of how miners interact with Bitcoin and how we can measure that.

One of the biggest misconceptions about Bitcoin mining is that it is, to quote Elon Musk, “highly centralized, with supermajority controlled by handful of big mining (aka hashing) companies.” This is objectively false. In reality, what we call mining nowadays is a highly layered activity.

In order to increase their odds of success, miners collectively contribute their resources to so-called mining pools. Pools represent large groups of individual miners that work together mining the very same block. When a pool successfully mines a block, it is awarded 6.25 newly issued B...

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