US emerging as block reward mining powerhouse

US emerging as block reward mining powerhouse

When you think block reward mining, you probably imagine racks of servers based in a Chinese facility. This reality is because China-based firms have long dominated the digital currency mining sector. Maybe that’s because of their proximity to ASIC miner manufacturers; maybe it’s China’s abundant and cheap energy resources. Whatever the reason, China drives the industry.

But after years of China producing over 65% of the hash power for most blockchain projects, the United States and Canada gradually reemerged from behind China’s megalithic shadow as a critical region within this sector. At the time of this writing, the two countries combined account for 15%-20% of the global mining hash power.

Industry watchers have noticed that hashrate emanating from North American has been increasing, eroding the centralized collective market share that Chinese competitors once held. There are no signs that this trend will reverse.

According to a CoinDesk report, “While the U.S. and Canada don’t have the cheapest energy on the planet, there’s plenty of under-used power and energy infrastructure to repurpose.” The report also mentions that North American-based firms have easier access to the capital markets and institutional investors.

This last statement is evident by the 19 publicly listed organizations based in the hemisphere, which far outpace any other region. Using the U.S. equity markets, firms can raise through [at-the-market] offerings to scale up their operations.

That is precisely what some firms have been doing through a trend known as ASIC financing. In this practice, large operations take out loans to bulk-order newer-generation hardware, thus flooding the network with new hashrate.

Even Chinese firms looking to diversify are exploring ways to capitalize on the benefit a North American operation offers. In natural renewable energy-rich areas like Texas and Alberta, electricity costs can be on par with China provinces while also offering more stability. Today, Chinese miners have a dysfunctional relationship with local authorities, often not knowing if current regulations or permits will continue into the next year.

Taras Kulyk, Sr. VP at Core Scientific, attribute this renewed growth to the regulatory certainty and advanced infrastructure. “The operational costs are a little bit more expensive in the U.S., but when you’re sinking $100 million or even a billion dollars into an ecosystem for infrastructure, you’re looking at stability,” said Kulyk.

China-based firms still have pricing advantages over North American rivals, such as cheaper human labor costs and access to government subsidies. The playing field is leveling.

That does not mean the Chinese ecosystem is dying. It points towards an overwhelmingly China-centric blockchain industry finally achieving the decentralization that its advocates falsely promoted it already being for years.

See also: TAAL’s Jerry Chan presentation at CoinGeek Live, The Shift from Bitcoin “Miners” to “Transaction Processors”

New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.

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