Cryptocurrency mining remains one of the most exciting aspects of the entire crypto market. Several companies have gone into mining to provide easier access to digital assets, especially in a world where these assets remain in high demand. Most people would very much rather not spend so much time and resources in learning how to trade.
Over the past few years, mining has taken off. Companies have invested millions into mining infrastructure, and activities have also been ramped up as miners look to satisfy the hunger and increasing demand for digital assets. It is an old tale that continues to keep the market going - demand grows, and supply works round the clock to keep up.
China's Growing Influence
One significant point that seems to concern many Bitcoin proponents is that the asset's mining is not as decentralized as the Bitcoin network itself.
The best measure of mining dominance globally is the Bitcoin Mining Map built by the Cambridge Centre for Alternative Finance. As the map shows, China alone holds 65.08 percent of the global mining hashpower. The United States, Russia, Kazakhstan, Malaysia, and Iran occupy the second to fifth places, respectively. Even at that, their combined hashpower isn't up to half of what China has.
China's dominance over the Bitcoin mining network is absolute. The country has some of the world's biggest mining firms. Its abundance of renewable energy has made mining relatively cheap for everyone interested in getting into the mining space or perhaps starting a mining pool.
Interestingly, the Chinese government seems to know this too. Back in 2019, the government began a systematic crackdown on crypto firms - exchanges, trading firms, Initial Coin Offering (ICO) issuers, and more. However, mining firms were largely exempt from this crackdown. It was almost as if the government didn't see them.
Time to Bring Some of that Mining Power Back
Although the country's dominance over the mining space isn't mainly a concern, many have pointed out that it still isn't ideal. Essentially, the problem isn't that any country - much less China - is leading the world in global hashrate. It's the fact that China has so much control over the Bitcoin network that scares a lot of industry insiders.
To wit, several firms have invested significant sums in redistributing that mining power around. The belief is that decentralization should extend to the Bitcoin network, since the entire asset was built on that concept. If the government doesn't invest money in making the network more decentralized, companies will have to act.
Riot Blockchain and Marathon Lead the Way
So far, several companies have been at the forefront of this campaign. One such firm is Riot Blockchain - a Colorado-based, publicly-traded mining company. The firm went on a significant purchasing spree in 2020, adding to its mining capacity and bolstering its operations on several fronts.
Recently, Riot published its full financial results for 2020, showing a 78 percent increase in total mining revenues - $12 million, up from $6.7 million in 2019. The jump came from Riot's ability to increase its operational hashrate from 101 petahashes per second in December 2019 to 566 petahashes per second in 2020.
Although the company posted a $12.7 net loss for 2020, the figures were better than the$20 million in losses that it had in 2019. Cash and cryptocurrency holdings at the company also increased from $11.3 million in 2019 to $235 million in 2020.
Another top mining company is the Marathon Patent Group. Based in Nevada, the firm has also ramped up operations in 2020, purchasing new mining rigs from companies like Bitmain. In a recent announcement, Marathon confirmed that it mined 196 BTC in the first quarter of this year, bringing its total asset holdings to 5,134 BTC.
The firm explained that it managed to scale its mining operations in Q1 after getting 10,300 Antminer s19 Pro ASICs from Bitmain. Its mining fleet consists of 5,800 miners, all generating 0.71 exahashes per second.
Other firms have ramped up their mining operations and hope to bring hashpower back to the United States and make the country the next frontier for mining. Hut8, Hive Blockchain, Layer1, and much more come to mind.
Legislators Waking Up to the Challenge
Interestingly, some legislators are also doing their best to attract mining activity. Earlier this year, two Kentucky lawmakers submitted a policy proposal that aimed to attract crypto mining firms into the state. The proposal, titled "AN ACT relating to the taxation of the commercial mining of cryptocurrency," was submitted by Chris Freeland and Steven Rudy - two Republican members of the state's legislative arm.
In their foreword, the lawmakers pointed out that Kentucky has a chance of becoming a leader in the U.S. mining space. With the state's abundance of electricity supply, it could provide lower energy rates to interested parties and become attractive instantly to them. Data shows that Kentucky's electricity rates as of October 2020 were 11.07 cents per kilowatt-hour (kWh). Most of its electricity comes from coal, and Kentucky has two of America's largest power plants.
The bill hopes to enact laws that will encourage crypto mining firms to move their operations to Kentucky. Some incentives include exemptions on use and sales taxes, which will cover electricity and properties used in mining facilities.
It is unclear whether these measures will be enough to bring mining back into the United States. The work being done is currently on a broad scale, but it should take a while before results begin to show.