Something is changing in the ‘Hashrate War’ between the United States and China

The United States is increasingly casting a larger shadow over China’s mining industry, which now accounts for 53% of the total Bitcoin hashrate. This narrowing of the gap by the northern country has been developing slowly over the years. The United States went from 0.30% in November 2020 to 37% in September 2024.

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Some data on hashrate between the United States and China

It all began with a timid incursion of the United States into mining in September 2018. For a moment, the country had 0.02% of the world’s mining power, but soon after it extinguished its flame and disappeared from the map.

China, for its part, has dominated Bitcoin mining for as long as anyone can remember, but that was not always the case. According to insights.brainsthe Asian country contributed nothing or little in terms of hashrate during January 2013. The following month it had already surpassed the Czech Republic.a pioneer in crypto-asset mining, accumulating up to 14% of total global power.

Since then, Chinese mining has remained unchallenged by all countries except the United States, its biggest rival in the sector.

As for the USA, this country did not reappear on the Bitcoin mining map until November 2020; at this time, its contribution to mining was much less than modest: 0.30%. That of China, at the same date, was of 80% of the total power in the world. The asymmetry was pronounced.

Since then, US hash power has been slowly growing while China’s has remained the same or decreased. In May 2022, for example, the US already had 25% of the hash power. China had 64%, the Czech Republic had 5%, and Japan had 2%. These four countries shared all the mining power at the time.

By August 2024, the US had already accumulated 35.72%. Just a month later, it added two percentage points to the previous figure, and today it accumulates 37% of hashrate, while China maintains a little more than 50%.

The trend is clear. In a two-sided war, the United States has been gradually gaining an increasingly larger space in cryptocurrency miningChina, for its part, has maintained its stable power, although its dominance is gradually waning.

Why is the gap between the US and China getting smaller?

The closing of distances is due to various reasons. One of them is that, after the Chinese central bank in May 2021 cracked down on bitcoin (BTC) mining and trading, mining work in the country would have lost confidence. It is said loss of confidence because it is worth clarifying that China has not stopped being the greater power of the world’s hashrate. However, it does seem to be progressively losing preeminence compared to the United States.

Regardless of whether what happened in China was a ban, a temporary sanction or a warning; and also despite the fact that during that time the hashrate produced by China was always above 50%, the truth is that The Asian country never again reached the 80% levels it had in mid-2021before and after the veto. This was due to the migration of many miners to other countries, mainly to the United States.

Meanwhile, Foundry USA became the pool with the largest hashrate in the world, surpassing AntPool and F2Pool, both Chinese. At the time of writing, Foundry USA still leads the pool ranking. It is clear that China’s ban almost immediately favored mining performed in the United States.

The United States, therefore, welcomed miners dissatisfied with the Chinese pseudo-ban. Especially the state of Texas (although not without showing some resistance), which included cryptoassets in its commercial code in order to encourage institutional investments and a more business-friendly legal framework.

More recently, presidential hopeful Donald Trump has also reinforced the country’s openness to bitcoin and cryptocurrencies with promises. Speaking at the Bitcoin 2024 conference in Nashville, Trump stressed the need for the country to lead the cryptocurrency industry, saying, “If we don’t do it, China will.” In his speech, he discussed plans to boost bitcoin mining and ensure that BTC is produced within the United States.

Overall, a new wave of US politics is seeking to support bitcoin mining in the country, which would benefit the US hash power if they were to win the game. Congressman Patrick McHenry, who serves as a representative for North Carolina’s 10th Congressional District, said:

There are many pretenders to lead the crypto world, and rightly so, but the true technologist, the true innovators and leaders understand what bitcoin entails. The technology and its implementation are free and they are being disruptive. We must accept that we need the United States to be a leader in this generation of technology rather than lagging behind.

Patrick McHenry, U.S. Congressman

Other representatives in favor of implementing policies favorable to bitcoin and cryptocurrencies in the United States include Cynthia Lummis, Kirsten Gillibrand, Wiley Nickel, Marsha Blackburn and the leader of the United States House of Representatives, Tom Emmer.

The growing success of the United States in Bitcoin mining is also explained by the fact that it is a country conducive to experimenting with renewable energy. Proof of this are initiatives such as Blockstream’s founding of a solar-powered farm in Texas; or others such as Aspen Creek in Colorado, suitable for powering some 3,000 ASIC miners.

The experimentation and implementation of these energies contributes, in turn, with greater acceptance of bitcoin mining as a legitimate occupation for society.

The United States does not prohibit, it promotes open conflict

Part of the reason for the implementation of renewable energy and the general openness to Bitcoin mining is the friction and criticism from a more open, less centralized society that promotes and tolerates conflict: the American one. Instead of banning Bitcoin mining due to its high electricity consumption and other factors, the United States has promoted a constructive federal conflict between various entities.

Of course, American society has not always been happy with Bitcoin mining, nor with the fact that Texas became at the site of large-scale mining activity, especially due to its high energy consumption.

According to the US Energy Information Administration, an independent analytical and statistical institute, cryptocurrency mining represents from 0.6% to 2.3% of US electricity consumption, a considerable percentage.

Solutions to the problems of mining in the United States

The main problems of intensive mining for the United States are: strains on the electrical grid during periods of peak demand, the potential for higher electricity prices, as well as effects on energy-related carbon dioxide (CO2) emissions.

To reduce the strain on the power grid, miners have adapted to programs that help limit their activity during peak periods.

Some grid operators have instituted programs that offer incentives to large electricity consumers to reduce their usage during periods of peak demand. Cryptocurrency miners have become regular participants in these programs, known as “demand response,” resulting in operations being scaled back or temporarily shut down.

United States Energy Information Administration

To reduce pollution, the country has been transitioning to the use of green energy. The United States is seen as a growing mining power because it functions as an open field for experimentation and the use of unusual methods: the use of methane gas, solar energy, wind energy, among others, to mine bitcoin.

For example, farms like Vespene Energy’s in Marathon County, Wisconsin, have experimented with using methane gas from landfills.

Rising electricity prices remain an open conflict in American localities where bitcoin mining is large. Part of the future growth of the activity in the country depends on solving this problem. By putting extra pressure on a region’s power grid, providers may increase the cost of energy in response to high consumption.

Miners have several ways to avoid high consumption: using low-consumption equipment and low-cost generators; also separating themselves from the main grid where locals are connected, or using less demand-sensitive forms of energy.

Something is changing: it’s the United States

That openness and experimentation with different energy sources; the willingness to advance technology motivated by conservative criticism; the fact that it is an open society that allows the synthesis of social and economic conflicts; that China itself put the brakes on the race for Bitcoin supremacy and the ability of the United States to amicably absorb a good fraction of Chinese mining activity; all are reasons that explain the constant improvement of the country’s mining industry and its rapprochement in terms of hashrate with China.

In conclusion, while Chinese society launched a veto and a law of silence on mining activity, the United States remained and remains open to the oratory, social, economic and judicial conflict produced by the activity of this industry in its territory.