Secret Bitcoin miners in China could still make up 20% of global hashrate

A cybersecurity firm in China says Bitcoin miners hiding out in the country still make up a significant part of the crypto's hashrate.

China may still house up to 20% of the world’s Bitcoin hashrate despite the country’s blanket crypto ban earlier this year, reports CNBC.

The outlet recently detailed data from Chinese cybersecurity firm Qihoo 360, published in November, which points to an average of 109,000 active crypto mining IP addresses in China every day.

Qihoo 360 says the majority of these addresses are centered in Guangdong, Shandong, Zhejiang, and Jiangsu.

If true, the data would undermine earlier estimates from Cambridge University’s Bitcoin Electricity Consumption Index (BECI), which indicated Bitcoin hashrate in China effectively went to zero between May and July.

At the time, Cambridge researchers found that when China’s Bitcoin hashrate dropped, other countries saw a sharp increase — likely due to China-based miners adopting VPNs or proxy servers to avoid detection.

Many larger operations could ship out to more hospitable surroundings in the US or Kazakhstan, however, this wasn’t an option for everybody.

  • Small and medium mining operations are reportedly using covert tactics to avoid unwanted government attention.
  • One miner told CNBC he’s become adept at “getting around things.”
  • By spreading operations across multiple sites, they minimize the chances of any drawing too much attention.

The miner said he runs 1,000 mining rigs powered via China’s electricity grid and another 5,000 with hydropower.

They often go “behind the meter” to access power from smaller sources rather than the main grid. “We never know to what extent our government will try to crack down to wipe us out,” they said.

Previously, Bitcoin miners in China simply went offline and waited for things to cool down, noted CNBC. They eventually started up again with a few extra precautions in place.

This time, massive energy shortages, the looming digital yuan, and aggressive climate targets mean Beijing likely wants its latest ban to stick.

State media tries to spook Bitcoin miners in China

For those caught flouting Beijing’s new rules, the punishment can be stiff.

Back in May, Inner Mongolia proposed tough new measures. Any companies found guilty of engaging in or facilitating crypto mining would be stripped of business licenses.

And earlier this month, Chinese state media reported on an individual who stole more than $12,000 worth of electricity from the city’s grid to mine crypto.

The person in question was reportedly fined an undisclosed amount and sent to prison for an undisclosed period.

Bitcoin mining in China has been taboo for years. This Vice video detailing a secret Chinese Bitcoin mine is from 2015.

Read more: [China warns Bitcoin miners to stop posing as regular IT companies]

State-run newspaper National Business Daily wrote (our emphasis) that the would-be miner “had bypassed the power grid, but could not escape the law.”

“Once you have made a mistake, it will be too late to regret it.”

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