“China ate 65% bitcoin?”… Mining even a jeans factory in the US

“My biggest concern this year is the expansion of the Bitcoin mine. We have built the infrastructure and software and are ready to do business in this market for a long time.”

Russell Khan, CSO (Chief Customer Success Officer) of Core Scientific, a US blockchain startup that develops an existing factory as a cryptocurrency mining site, said that this year’s goal is to increase cryptocurrency mining sites. According to the Wall Street Journal (WSJ), the company has raised $95 million in investment over the past two years, transforming a jeans factory in North Carolina and a carpet factory in Georgia into a mining farm. At the same time, he also received a $20 million loan. U.S. companies are challenging China’s predominantly No. 1 bitcoin mining world. It is analyzed that competition between the US and China has intensified in the field of bitcoin mining as well as aggressive investments using enormous funds and infrastructure as leverage.

According to an aggregate of the Cambridge University Alternative Finance Center, as of September 2019, China’s bitcoin hashrate (mining capacity) was 75%, ranking the world’s first. The United States ranked third after Russia (5.93%) with only 4%. However, 7 months later, in April of last year, the United States increased its hash rate to 7%, surpassing Russia and rising to second place. China’s share fell to 65%. The United States quickly narrowed the gap with China.

Hash rate is a measure of the computational processing power of a computer for mining Bitcoin. The more mining equipment there are, the higher the computational efficiency, the higher the number and the higher the probability of generating virtual currency.

As the bitcoin price hits the 50,000 dollar range, US companies are not spared the investment necessary for mining. Blockcap, a specialized cryptocurrency mining company, ordered an additional 10,000 miners from Bitmain, a Chinese virtual currency miner manufacturer on the 17th (local time). Blockcap said, “From March, the number of miners will double.”

Bitcoin has 88% of the 21 million issued. Bitcoin mining becomes more difficult as competition intensifies. That means more computing resources are required, and miners have to continue to invest in expensive miners and power infrastructure. As Bitcoin attracts investors’ attention, the stock price of a mining company is also on the rise. Bitcoin mining company and NASDAQ-listed Riot blockchain stocks soared 210.4% this month. Marathon patent also jumped 97.5% during the same period.

China’s advantage in bitcoin mining is thanks to its cheap electricity bills. In particular, Xinjiang Weiwuer Autonomous Region has become a’mining hub’ that produces a third of China’s bitcoin production based on low-cost electricity. However, China’s “political risk” is a factor of market uncertainty. Cryptocurrency mining is not illegal in China, but trading is illegal. China made cryptocurrency trading illegal and banned it entirely in 2017. In recent months, China has reportedly accused bitcoin miners of money laundering and freeze their assets.

On the other hand, US miners are free from financial regulation. However, U.S. business operators may face community backlash due to the amount of carbon generated during the Bitcoin mining process. Tesla, who recently revealed its purchase of bitcoin, has also been criticized for “encouraging carbon emissions.” According to the University of Cambridge, Bitcoin’s annual electricity use is more than that of Argentina.

Meanwhile, opinions still differ over the prospects for Bitcoin. On the 18th, US Treasury Secretary Janet Yellen said, “We need to strengthen the supervision of the institutions dealing with bitcoin and ensure that they fulfill regulatory responsibilities.

Bill Gates, the founder of Microsoft (MS), somewhat softened his negative stance on Bitcoin. On that day, Gates told CNBC, “I don’t have bitcoin, but that doesn’t mean I’m skeptical.” In 2018, he criticized “Bitcoin investment is completely a’stupid theory'” and turned to’neutral’. The day before, Cash Wood, CEO of ArcInvest, an American investment firm, predicted that Bitcoin could go up to $250,000. “If US companies add 10% of their cash to Bitcoin, the price of Bitcoin will rise by an additional $200,000,” he said. The world’s first listed Bitcoin Listed Index Fund (ETF) successfully completed its debut. The Bitcoin ETF, which was listed on the Toronto Stock Exchange in Canada and started trading under the ticker code’BTCC’, reached a trading volume of $165 million (approximately 182.6 billion won) on the 18th.

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