Former Canaan Executive Attributes Bitcoin Hashrate Decline to China Shutdowns

Bitcoin's hashrate experienced a significant decline of approximately 10% in just one day, a situation attributed to mining operations shutting down in China's Xinjiang region. This downturn was noted by Jianping Kong, a former executive at Canaan, a company producing Bitcoin mining hardware.

Key Takeaways

Bitcoin's hashrate dropped by around 10% on a single day, translating to a loss of roughly 100 terahashes per second (TH/s).
Former Canaan executive Jianping Kong links this decline to the shutdown of around 400,000 mining machines in Xinjiang, China.
Historically, China was a leader in Bitcoin mining but has become less reliable since government crackdowns.
The U.S. Bitcoin mining sector is expanding rapidly, with investments and new operations emerging across various states.

Bitcoin Hashrate Decline

Bitcoin Hashrate Decline Attributed to Shutdowns in China

Recently, Bitcoin's hashrate fell by about 10% in just 24 hours. Jianping Kong, the former co-chairman of Canaan, a manufacturer of Bitcoin mining hardware, suggested that this drop was due to mining farms going offline in China’s Xinjiang autonomous region. In a post on X (formerly Twitter) on Monday, Kong indicated that Bitcoin’s hashrate decreased by approximately 100 terahashes per second (TH/s) since Sunday, attributing it to the shutdown of “at least 400,000 machines.” This estimate is based on the performance of application-specific integrated circuit (ASIC) miners, each capable of about 250 terahashes.

While it is difficult for Cointelegraph to independently verify Kong's claims, his previous role at one of China’s leading Bitcoin mining hardware companies does provide some weight to his statements. According to data from YCharts, Bitcoin's hashrate slipped from 1,053 TH/s on Sunday to nearly 943 TH/s the following day, marking a decline of over 10% or 110 TH/s. However, this overall hashrate is derived from network statistics, and precise measurements can be challenging.

Hashrate Data
Source: Jianping Kong

China’s History with Bitcoin Mining

Historically, China has played a major role in the Bitcoin mining landscape. Prior to 2021, the country accounted for approximately 65% of the global Bitcoin hashrate. However, following government regulations and bans on mining, this dominance has shifted. In 2024, mining activity in China saw a resurgence, with recent data indicating that China now comprises about 14% of global Bitcoin mining operations. CryptoQuant, however, estimates that the contribution may be between 15% to 20%.

Despite the strict regulations, some miners continue to take advantage of cheap electricity across China, as reported by Reuters last month. Kong expressed discontent regarding this situation, remarking that the cessation of operations in Xinjiang effectively benefits U.S. Bitcoin mining without any effort from the U.S. government.

Bitcoin Mining and Politics
Source: Jianping Kong

The Rise of Bitcoin Mining in the U.S.

Kong's remarks highlight the rapid growth of the U.S. Bitcoin mining sector. At the end of August, Hut 8, a notable Bitcoin mining firm, announced the establishment of four new mining sites in Texas, Louisiana, and Illinois, aiming to increase its capacity by 1.5 gigawatts.

Hut 8 operates as the parent company of American Bitcoin, a venture with ties to the Trump family, which went public through a merger earlier this year. The company’s board includes Eric Trump, one of Donald Trump’s sons, suggesting an increasing interest from U.S. leadership in Bitcoin mining.

Moreover, the U.S. is taking a more active stance against China’s Bitcoin mining and ASIC markets. Reports from late November indicated that a leading Chinese ASIC producer is undergoing investigation in the U.S. due to national security concerns. Authorities are examining whether the mining hardware could potentially be used for surveillance or sabotage against the U.S. power grid. This scrutiny could also impact the Trump family entity, as American Bitcoin has purchased a sizable fleet of 16,299 Antminer U3S21EXPH units from Bitmain.

In October 2024, U.S. authorities opened an investigation into a Chinese chip designer associated with Bitmain over its links to Huawei, a company under U.S. sanctions. Following this, U.S. Customs and Border Protection halted the delivery of thousands of Bitmain ASICs, with the hardware only being released as of March this year.

In conclusion, as China’s constraints on Bitcoin mining intensify, the U.S. is well-positioned to potentially claim a leading role in the global Bitcoin mining landscape.