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Why is China dominant in Bitcoin mining? We look at the massive hydropower boom in China over the last 10 years and how Bitcoin mining could be the inadvertent beneficiary of over investment in hydropower, linked to aluminum production, in remote regions in China

Abstract: This piece explores why China appears to dominate the Bitcoin mining industry. Chinese Bitcoin mining could be the inadvertent beneficiary of a massive boom and over-investment in hydro power, linked to aluminum production, in remote regions in China over the last 10 years.

China globally dominates most energy related fields

One question often asked by some in the Bitcoin community is Why are so many mining pools and miners based in China?

The most basic response to this question is: why not? China is not just some random country. It is a global economic powerhouse, dominant in most industrial and energy sectors. For instance:

China accounts for roughly 68% of the world’s imports of iron ore.1 China produces roughly 54% of the world’s aluminium.2 China consumes roughly 50% of the world’s coal.3 Of the 60 nuclear plants under construction across the world, 22 are in China, and China has accounted for about 183% of the world’s growth in nuclear-power consumption in the last 10 years (this number exceeds 100% because Japan shut down its reactors following the Great East Japan earthquake of 2011).4 China consumes about 30% of the world’s hydro power and accounts for 76% of the world’s growth in hydro-power consumption in the last 10 years3

China is unquestionably already the dominant driver of the global energy industry, and perhaps it is no surprise that China is dominant in Bitcoin mining, an industry that is strongly related to energy generation. Indeed, new, efficient power plants, particularly in the field of hydro power, may partially explain China’s dominance in Bitcoin mining.

Reasons typically cited for Chinese dominance

One of the largest and most discussed advantages for China is the local infrastructure and expertise that enables mining farms to quickly set up as soon as the mining chips are available. This setup process is said to be much slower in other regions. Being able to quickl...

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