Termed after ‘the Great Migration’ of the 20th century, though contextually different, the Great Mining Migration is viewed as the single greatest moment in bitcoin’s history that could set the clock back and pave the way for true democratization of blockchain network.
What led to the Miners Exodus?
In May of 2021, Beijing announced a massive crackdown on cryptocurrency mining and trading in China, paving the way to dubbed “the great mining migration” in crypto circles. China accounts for more than half the world’s bitcoin mining activities.
Mining is an energy-intensive process performed by miners on specialized computers to verify transactions on the blockchain network. A high mining hash rate, the computational power per second used when mining, is critical for the network’s security.
Is lower Hash Rate a concern?
The hash rate has since declined by more than 20% following the mining ban in China. In the short run, the drop in cryptocurrency prices directly corresponds with the fall in hash rate, while an imminent threat, a 51% attack, is looming large in the minds of crypto sceptics.
However, blockchain experts believe that such attacks are one-off events and hard to come by in a diversified global mining network. Events like the 51% attack, where few miners monopolize the network by controlling more than 50% of the network’s mining power and block new transactions, is exactly the reason why breaking China’s dominance in bitcoin mining, though momentarily adversarial to bitcoin’s price, is good in the long run.
The Great Mining Migration is thus the watershed moment in bitcoin’s history, an opportunity to democratize the mining process and realize complete decentralization.
Where are the miners headed?
The greatest and the most underrated feature of bitcoin is that it is location agnostic. With just an internet connection needed, miners can quickly migrate to locations that provide cheap renewable energy – simultaneously addressing the carbon footprint concern of bitcoin mining.
“The cool thing about bitcoin that is underappreciated by a lot of the naysayers is that it’s a portable market; you can bring it right to the source of energy,” said Steve Barbour, founder of Upstream Data.
Amidst a surge in pro-bitcoin stance by Texas, Wyoming, and Miami, the ousted miners from China are looking at Central Asia, Northern and Eastern Europe, and North America as possible destinations. While states like Texas have some of the cheapest electricity globally, it is equally important to look at greener sources. Immediate neighbours like Kazakistan are a plausible destination or stopover while miners explore their options to migrate west.
P.S: KuberVerse is an educational initiative. Anything expressed here directly or indirectly is not investment advice. And we ask you to do your own research before investing.
Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.
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