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After China banned cryptocurrencies in 2021, there was a massive exodus of miners to the United States, Kazakhstan, and other destinations. However, new data from the Cambridge Centre for Alternative Finance (CCAF) shows that Chinese miners did not disappear — many still operate, albeit covertly.

Today, China has emerged as the globe's second-largest hub for Bitcoin mining. Although it appeared that China had contributed zero percent of Bitcoin's total hash rate last July — two months after a ban on mining went into effect — the industry quickly roared back to life September 2021 to January 2022, when China constituted approximately 20% of the total hash rate, referring to the computational power per second the Bitcoin network has produced in the last 24 hours.

Indeed, by September 2021, China accounted for 22.3% of Bitcoin's hash rate, while the U.S. took the top place at 27.7%.

This rapid recovery of China's mining sector indicates that "significant underground mining activity has formed" in China, according to the CCAF study. "Access to off-grid electricity and geographically scattered small-scale operations are among the major means used by underground miners to hide their operations from authorities and circumvent the ban."

"It takes time to find existing or build new non-traceable hosting facilities at that scale," CCAF said. "It is probable that a non-trivial share of Chinese miners quickly adapted to the new circumstances and continued operating covertly while hiding their tracks using foreign proxy services to deflect attention and scrutiny."

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"As the ban has set in and time has passed, it appears that underground miners have grown more confident and seem content with the protection offered by local proxy services," it added.

While China has regained its dominance in global Bitcoin mining, others have fallen in place. Political turbulence and economic unrest in Kazakhstan, once the second-largest contributor to the mining hash rate, made its global hashrate drop to 13.22% this year.

The United States, however, has strengthened its position as the top miner, and today boasts the greatest growth in its hashrate. More than half of mining in the U.S. is concentrated in just three states: Georgia (30.76%), Texas (11.22%), and Kentucky (10.93%), driven largely by cheap electricity, growing housing stock, and pro-mining legislation. Overall, America's installed capacity rose from 42.74 EH/s last August to 70.97 EH/s earlier this January.

"The geographical mining landscape has again shifted substantially, with the U.S. now cementing its dominant position by a wide margin while other countries are only moderately growing their capacity," the study said.