A new report from the Cambridge Centre for Alternative Finance (CCAF) highlights a major shift in the global Bitcoin mining landscape, revealing that the United States now controls an overwhelming 75.4% of the global Bitcoin network’s hashing power. This figure, which represents approximately 600 exahashes per second (EH/s) out of the global total of 796 EH/s, raises important questions about the implications of such a high concentration of mining power in one country.
The change follows the relocation of mining operations after China’s 2021 ban on cryptocurrency mining. Prior to the ban, China held a dominant position, accounting for 65-75% of the global Bitcoin hashrate. With the country’s crackdown, many miners moved to the U.S., attracted by abundant energy resources and favorable policies. This migration has contributed to a significant rise in U.S.-based mining activity, prompting concerns about centralization and its potential impact on the decentralization ethos that Bitcoin was founded upon.
Centralization Poses Potential Risks
While the pro-Bitcoin stance of the Trump administration has fueled the growth of mining in the U.S., this concentration of mining power is also seen as a double-edged sword. The decentralized nature of Bitcoin is one of its defining features, ensuring that no single entity, including governments, can control or manipulate the network. However, the current dominance of U.S.-based miners raises the risk of political interference. A future administration, regardless of its views on Bitcoin, could potentially use the country’s mining dominance to exert influence over the Bitcoin network.
Howard Lutnick, U.S. Secretary of Commerce and former CEO of Cantor Fitzgerald, recently shared his vision of the U.S. as a Bitcoin “superpower.” His government-backed initiatives, like the Commerce Department’s Investment Accelerator, are designed to streamline the process for miners to build off-grid power plants. According to Lutnick, Bitcoin is seen as a commodity, and the U.S. is keen to tap into its potential by easing regulations to promote mining growth.
However, the concentration of 75% of the global hashrate in the U.S. raises important questions. Could future U.S. policymakers use this position of power to regulate or censor Bitcoin transactions? While China’s previous dominance did not lead to outright network manipulation, the risks associated with centralization remain. With the U.S. now holding such a significant portion of the hashrate, these concerns are more pressing than ever.
Can the U.S. System Prevent Overreach?
Despite these concerns, the structure of the U.S. federal system offers a potential safeguard against overreach. The division of powers between federal and state governments could create resistance to any attempts to manipulate the industry. States with a large concentration of mining activity may resist federal interference, arguing that such actions would harm Bitcoin’s value and investor confidence.
In addition, the weakening of the U.S. sanctions regime could offer some protection for Bitcoin. Following the seizure of Russian treasuries in 2022, several countries have reduced their holdings of U.S. bonds, challenging the dominance of the U.S. dollar. The Trump administration’s pivot from financial sanctions to tariffs may reduce the likelihood of using the U.S. mining sector as a tool for censorship. This shift could provide Bitcoin with some breathing room, as a concentrated mining industry may become a more vulnerable target for regulatory action.
The Need for Diversification
With 75.4% of the global hashrate now concentrated in the U.S., Bitcoin faces a critical choice. Should the community seek to diversify mining operations to reduce the risks of centralization? Or should they continue to embrace the U.S.’s mining dominance, leveraging its resources and favorable policies?
The future of Bitcoin may depend on how these questions are answered. While the network remains decentralized for now, the concentration of mining power in a single country presents a potential vulnerability. A future U.S. government could attempt to regulate or control the industry, risking the very decentralization that makes Bitcoin unique.
For Bitcoin to thrive, supporters must remain proactive, ensuring that the network’s integrity and resilience are maintained, regardless of who holds power. The rise of U.S. mining presents both an opportunity and a challenge, and how the industry responds could shape the future of this emerging asset.