Why We Can’t Trust Bitcoin Mining Hash Rate Data From China

China has “re-emerged” arsenic a large bitcoin mining hub successful 2022, representing much than 20% of the Bitcoin network’s hash rate, according to new information from Cambridge’s Centre for Alternative Finance (CCAF). The October 2021 information update from CCAF indicated that “mining operations successful mainland China person efficaciously dropped to zero.”

So, what caused this purported tremendous whiplash successful mining enactment from a CCAF-reported precocious of 75% successful September 2019, to 0%, and present backmost to 20%? Since July 2021, Bitcoin’s hash complaint has grown astatine a dependable pace, paring its losses from China’s archetypal prohibition and continuing to acceptable grounds highs successful caller months. But what happened successful China? And is the caller CCAF information an close practice of the authorities of bitcoin mining?

This nonfiction aims to supply further discourse to the CCAF information and explicate wherefore the data, though an important effort to effort to quantify trends successful the mining industry, is not reliable.

There Was Never 0% Hash Rate In China

Analysis of China’s monolithic resurgence successful mining enactment is premised connected its anterior authorities of having perfectly nary mining enactment whatsoever, which is wholly false. When CCAF archetypal released its information past year, showing nary mining enactment successful China, the project’s pb was cautious to suffice it arsenic the region’s “reported” stock of hash rate, which could theoretically disagree from its existent share. Other researchers, mining manufacture leaders and this author knew the 0% fig to beryllium inaccurate and said truthful publicly.

CCAF researchers dismissed these claims from existent miners arsenic “difficult to verify,” preferring to thin connected their ain methodology. But CNBC newsman MacKenzie Sigalos took these claims seriously, and she later reported connected the progressive underground mining country successful China. Ironically, the reporting by Sigalos was cited by CCAF researchers successful their latest blog station with updated China mining analysis.

With a precipitous driblet successful full hash rate, a coinciding driblet successful bitcoin’s terms and changeless media attraction paid to the aboriginal of mining aft China’s ban, information that claimed 0% of hash complaint was coming from China acceptable the narrative. But the information wasn’t accurate, and miners knew it. So wherefore was the 0% fig ever published?

Mining Data Is Hard To Collect And Cambridge Bitcoin Mining Data Is Flawed

Data is lone arsenic reliable arsenic the methodology utilized to cod it, and for CCAF mining data, the assumptions successful the methodology intelligibly show inherent problems with the information collection. These structural difficulties successful information compromise the reliability of the information arsenic it’s presented.

One cardinal nonaccomplishment is the methodological assumption that a mining facility’s IP addresses are an close denotation of the hash rate’s geographic location. Consider an improbable but feasible script wherever a miner based successful Mexico uses a proxy with an IP code successful Germany successful January, switches to Australia arsenic a proxy aboriginal successful April, and past uses an IP code based successful Romania successful July. CCAF’s breached methodology would presume that this miner physically moved to each 3 of these locations passim the twelvemonth — a logistical nightmare and economical impossibility for immoderate miner.

Some manufacture commentators support CCAF’s probe by asserting that somewhat inaccurate information is amended than nary information astatine all. This thought is truthful laughably illogical it hardly deserves mentioning. And CCAF truthful heavy caveats and qualifies its ain information that its reliability is minimal astatine best. For example, successful aggregate places connected its data dashboard, the CCAF qualifies its information for Germany and Ireland by indicating, “To our knowledge, determination is small grounds of ample mining operations successful Germany oregon Ireland that would warrant these figures. Their stock is apt importantly inflated owed to redirected IP addresses via the usage of VPN oregon proxy services.”

Put differently, the information is not reliable.

To beryllium clear, the problems with CCAF’s methodology are not its ain doing. Mining information is outstandingly hard to accurately collect. Similar mining information sets built by the newly-launched Bitcoin Mining Council besides received immoderate public criticism for the accuracy of their methodology. If anything, the continued enactment by CCAF to study mining information serves to exposure galore of the unavoidable issues with collecting close and typical information from bitcoin mining.

Mining Pools Can Lie

CCAF besides relies connected self-reporting by miners to assistance its probe connected the geographic organisation of hash rate. The evident occupation with this speech of accusation is that miners tin lie. This constituent was made publically connected Twitter by Ethan Vera, co-founder of Luxor Mining, erstwhile helium tweeted, “…the mining pools submitting information to Cambridge lied. They showed 0 hashrate successful China erstwhile that intelligibly wasn’t the case.”

The governmental information for miners to prevarication is obvious. What miner would willingly study afloat oregon adjacent partial mining enactment successful the world’s astir aggressively anti-mining region? Any inducement to self-report mining successful China is simply non-existent. And, arsenic mentioned previously, the 0% hash complaint statistic perfectly fits the ongoing communicative of a afloat mining exodus from China.

CCAF's estimated mining hash complaint from China versus the U.S.

Data submitted to CCAF is fixed voluntarily, moreover, and determination are precise fewer transverse checks disposable to Cambridge’s probe squad leaving them to person to simply spot the answers fixed to it, which is an unreliable probe method.

China’s Resurgence Is Logistically Improbable

Considering the real-world logistics of orchestrating China’s resurgence successful hash complaint corroborates the unreliability of the CCAF’s latest data. It is simply an operational impossibility that astir fractional of the hash complaint that near China 1 twelvemonth agone decided to wantonness its recently secured mining facilities elsewhere successful the satellite and relocate backmost to China.

Even for the non-trivial fig of miners that opted to simply determination their machines into retention alternatively of suffering the hassle oregon relocating internationally, determination are fewer indications that the bulk of this radical of miners person chosen to oregon are capable to afloat redeploy their hardware.

And China surely has not reversed its mining ban.

The hash complaint that is presently online successful China has ever been successful China. Miners person known this and publically spoken astir it. But structural limitations for academics researching this dynamic person resulted successful antecedently inaccurate and persistently unreliable information astir this hash rate.

Conclusion

Even though this nonfiction has somewhat harshly criticized the information published by the CCAF, it is not liable for the foundational reasons wherefore its information is unreliable. Collecting mining information is difficult, particularly erstwhile cardinal metrics are easy manipulated oregon misrepresented. And the enactment by CCAF demonstrates these difficulties.

Of course, China is improbable to ever regain its erstwhile stock of the planetary bitcoin hash complaint market. Industry leaders and academics alike tin hold connected this. Chinese officials are inactive confiscating mining hardware by the hundreds and thousands of rigs, and galore large-scale miners person permanently relocated to different parts of the world. But the Chinese underground mining manufacture volition ne'er beryllium extinguished.

This is simply a impermanent station by Zack Voell. Opinions expressed are wholly their ain and bash not needfully bespeak those of BTC Inc oregon Bitcoin Magazine.