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

China has “re-emerged” as a significant bitcoin mining hub in 2022, representing more than 20% of the Bitcoin networks hash rate, according to brand-new information from Cambridges Centre for Alternative Finance (CCAF). The October 2021 information update from CCAF suggested that “mining operations in mainland China have successfully dropped to zero.”So, what caused this purported enormous whiplash in mining activity from a CCAF-reported high of 75% in September 2019, to 0%, and now back to 20%? Considering that July 2021, Bitcoins hash rate has actually grown at a constant speed, paring its losses from Chinas original restriction and continuing to set record highs in recent months. What happened in China? And is the new CCAF information a precise representation of the state of bitcoin mining? This post aims to supply additional context to the CCAF information and describe why the information, although an important effort to attempt to quantify patterns in the mining market, is not reliable.There Was Never 0% Hash Rate In ChinaAnalysis of Chinas enormous resurgence in mining activity is predicated on its prior state of having absolutely no mining activity whatsoever, which is entirely incorrect. When CCAF initially released its data last year, showing no mining activity in China, the jobs lead bewared to qualify it as the areas “reported” share of hash rate, which might in theory vary from its actual share. Other researchers, mining industry leaders and this author knew the 0% number to be inaccurate and said so publicly.CCAF scientists dismissed these claims from real miners as “difficult to confirm,” preferring to lean on their own method. But CNBC press reporter MacKenzie Sigalos took these claims seriously, and she later on reported on the active underground mining scene in China. Ironically, the reporting by Sigalos was cited by CCAF scientists in their newest article with updated China mining analysis.With a sheer drop in total hash rate, a coinciding drop in bitcoins rate and continuous media attention paid to the future of mining after Chinas ban, data that claimed 0% of hash rate was originating from China fit the narrative. However the data wasnt accurate, and miners understood it. Why was the 0% number ever published?Mining Data Is Hard To Collect And Cambridge Bitcoin Mining Data Is FlawedData is only as trusted as the approach utilized to gather it, and for CCAF mining data, the assumptions in the method clearly demonstrate intrinsic problems with the data collection. These structural troubles in truth compromise the dependability of the information as its presented.One crucial failure is the methodological presumption that a mining facilitys IP addresses are an accurate indication of the hash rates geographical area. Think about a practical but not likely situation where a miner based in Mexico utilizes a proxy with an IP address in Germany in January, changes to Australia as a proxy later on in April, and then utilizes an IP address based in Romania in July. CCAFs damaged methodology would assume that this miner physically relocated to all 3 of these areas throughout the year– a logistical nightmare and financial impossibility for any miner.Some industry commentators protect CCAFs research by asserting that somewhat inaccurate information is better than no data at all. This idea is so laughably illogical it barely should have discussing. And CCAF so heavily caveats and qualifies its own data that its dependability is very little at best. For instance, in numerous put on its data dashboard, the CCAF certifies its information for Germany and Ireland by showing, “To our knowledge, there is little evidence of big mining operations in Germany or Ireland that would justify these figures. Their share is most likely considerably pumped up due to rerouted IP addresses via making use of VPN or proxy services.” Put differently, the data is not reliable.To be clear, the issues with CCAFs approach are not its own doing. Mining information is outstandingly challenging to precisely collect. Similar mining data sets developed by the newly-launched Bitcoin Mining Council likewise received some public criticism for the accuracy of their methodology. The ongoing work by CCAF to report mining data serves to expose numerous of the inevitable concerns with gathering precise and representative data from bitcoin mining.Mining Pools Can LieCCAF also relies on self-reporting by miners to assist its research study on the geographical distribution of hash rate. The apparent issue with this exchange of details is that miners can lie. This point was made openly on Twitter by Ethan Vera, co-founder of Luxor Mining, when he tweeted, “… the mining swimming pools sending information to Cambridge lied. They showed 0 hashrate in China when that clearly wasnt the case.”The political inspiration for miners to lie is obvious. What miner would willingly report complete or perhaps partial mining activity on the planets most strongly anti-mining area? Any incentive to self-report mining in China is merely non-existent. And, as pointed out previously, the 0% hash rate figure perfectly fits the continuous story of a full mining exodus from China.CCAFs estimated mining hash rate from China versus the U.S.Data sent to CCAF is offered willingly, moreover, and there are really few cross checks offered to Cambridges research group leaving them to have to just trust the answers given to it, which is an unreliable research study method.Chinas Resurgence Is Logistically ImprobableConsidering the real-world logistics of orchestrating Chinas resurgence in hash rate corroborates the unreliability of the CCAFs latest information. It is just a functional impossibility that nearly half of the hash rate that left China one year ago decided to desert its newly secured mining centers in other places in the world and relocate back to China.Even for the non-trivial variety of miners that opted to just move their machines into storage rather of suffering the trouble or relocating worldwide, there are couple of indications that the bulk of this group of miners have actually chosen to or have the ability to fully redeploy their hardware.And China certainly has actually not reversed its mining ban.The hash rate that is currently online in China has always remained in China. Miners have actually known this and publicly discussed it. Structural restrictions for academics researching this dynamic have resulted in formerly inaccurate and constantly unreliable information about this hash rate.ConclusionEven though this post has rather harshly criticized the information released by the CCAF, it is not responsible for the fundamental reasons why its information is undependable. Gathering mining data is hard, especially when essential metrics are easily controlled or misrepresented. And the work by CCAF demonstrates these difficulties.Of course, China is unlikely to ever regain its previous share of the worldwide bitcoin hash rate market. Market leaders and academics alike can settle on this. Chinese authorities are still taking mining hardware by the hundreds and thousands of rigs, and many large-scale miners have actually permanently relocated to other parts of the world. But the Chinese underground mining market will never ever be extinguished.This is a guest post by Zack Voell. Viewpoints expressed are entirely their own and do not always show those of BTC Inc or Bitcoin Magazine.

Ironically, the reporting by Sigalos was pointed out by CCAF researchers in their newest blog post with updated China mining analysis.With a precipitous drop in total hash rate, a corresponding drop in bitcoins rate and consistent media attention paid to the future of mining after Chinas ban, data that declared 0% of hash rate was coming from China fit the narrative. Why was the 0% number ever published?Mining Data Is Hard To Collect And Cambridge Bitcoin Mining Data Is FlawedData is only as dependable as the approach utilized to collect it, and for CCAF mining data, the presumptions in the method plainly demonstrate fundamental problems with the data collection. Similar mining data sets built by the newly-launched Bitcoin Mining Council also got some public criticism for the precision of their approach. And, as pointed out formerly, the 0% hash rate statistic perfectly fits the continuous story of a full mining exodus from China.CCAFs estimated mining hash rate from China versus the U.S.Data sent to CCAF is provided willingly, additionally, and there are extremely couple of cross checks readily available to Cambridges research team leaving them to have to merely trust the answers offered to it, which is an unreliable research method.Chinas Resurgence Is Logistically ImprobableConsidering the real-world logistics of managing Chinas renewal in hash rate supports the unreliability of the CCAFs most current data. It is merely a functional impossibility that nearly half of the hash rate that left China one year ago decided to desert its newly secured mining centers in other places in the world and relocate back to China.Even for the non-trivial number of miners that decided to simply move their makers into storage rather of suffering the inconvenience or relocating worldwide, there are couple of indications that the majority of this group of miners have picked to or are able to completely redeploy their hardware.And China definitely has actually not reversed its mining ban.The hash rate that is presently online in China has actually always been in China.