According to the Cambridge Centre for Alternative Finance (CCAF), China is once again contributing a significant amount to global bitcoin mining despite being banned last year.
From September 2021 to January this year, China's contribution to the bitcoin mining network was second only to that of the U.S., according to CCAF's Bitcoin Electricity Consumption Index (CBECI), which tracks mining activity around the world based on geographic data reported by partner pools.
Following last year's crackdown on bitcoin mining in China, China's share was reduced to 0% in July and August. However, the latest data from CCAF shows that the share increased to 22.29% in September and fluctuated around 20% from October to January.
This indicates that underground mining has taken off in China. "Access to off-grid electricity and geographically dispersed small-scale operations are among the main means used by underground miners to hide their activities from authorities and circumvent the ban," the CCAF said in a statement, as reported by the South China Morning Post.
The sudden drop to 0% in July and August, followed by a rapid rise in subsequent months, suggests that miners may have been operating in secret, hiding their sites while using foreign proxy services to deflect attention and scrutiny.
Kazakhstan, for example, appears to be one of the preferred targets of mining companies. According to CBECI, the Central Asian country's share of the network rose to more than 18% last August.
By September, miners may have come to believe that foreign proxy services are having the desired effect and that they no longer need to go to such lengths to hide their activities in China.