In China, they have coined a term to identify the ongoing migration of Bitcoin miners to other countries. They have called it the “great mining migration”, referring to the fact that after the Chinese mining ban in May 2021, many miners have decided to leave China and go elsewhere to continue their activities.
The flight of miners from China
It is enough to consider that before this ban, more than half of the computing power used worldwide to mine Bitcoin was allocated in China. A few months after the ban that percentage had dropped to 0%.
During the same period, Bitcoin’s hashrate itself more than halved, but then over the next few months it recovered all of its losses, and in the last few days it is making new all-time highs.
The phenomenon behind this growth is the physical movement of mining activities from China to overseas, and in particular to the US and neighbouring Kazakhstan.
The frontiers of Bitcoin’s great mining migration
But once in Kazakhstan, miners faced new problems due to the significant rise in the cost of energy sources. Kazakhstan was chosen not only because of its proximity to China, but also because of very low energy prices. As this is no longer the case, it is possible that miners will migrate back to other places.
To date, there are numerous countries in the world that have problems with cryptocurrency mining, mainly due to high energy consumption.
After China and Kazakhstan, there are also Kosovo, where mining has been banned, and Iran, where it has been temporarily suspended for years now during the months when the highest energy consumption occurs.
The new locations
So although the “great mining migration” started in China and caused almost all Chinese miners to flee, it did not end when almost all mining activities in the great Asian country were suspended.
Rather, some believe it will continue for some time to come, because the underlying dynamic tends to perpetuate itself.
Miners are trying to move to places where the cost of energy is low. Typically, the low price of energy sources is due to relatively low consumption, such as in Kazakhstan, which can increase significantly because of mining. So they risk increasing the price of energy in the places they move to, perhaps forcing them to migrate again.
At the moment, the only country that seems to be accommodating many miners without any particular problems is the US, perhaps because its energy consumption is already so high that mining alone is not able to increase it massively in percentage terms.
It remains to be seen whether in the medium or long term the US too will have problems with energy consumption from mining, or whether it will eventually be able to absorb all the miners fleeing from other countries.