How China's crackdown has shaken up the bitcoin mining pool market share

The Bitcoin network’s hash rate — the capacity to mine bitcoins — has stabilized and is starting to grow again now that it has been two months since China began shutting down local bitcoin mining farms.

China’s policy maneuvers have disrupted not only the nation’s dominance over the global bitcoin hash rate. They have also significantly reshuffled the market share of the world’s biggest bitcoin mining pools.

The chart below shows the historical real-time hash rate of the top 15 bitcoin mining pools over the past 10 weeks.

Further, The Block's Dashboard has now visualized the daily real-time hash rate by each pool.

Expand Chart

Here are four main takeaways from the hash rate data.

1. A realignment at the top

Perhaps the most intuitive takeaway from the chart above is the reshuffle at the top tier of bitcoin mining pools — and the closing of the gap between the tiers.

Prior to China’s crackdown orders, three Chinese pools, namely Antpool, F2Pool and Poolin, formed the first tier. Their average hash rates were around 25,000 petahashes per second (PH/s). The second tier included BTC.com, Binance Pool, ViaBTC and Huobi Pool; hash rates in that tier were around 15,000 PH/s. Notably, two of them were exchange pools.

Two months later, Antpool is now the only pool with a real-time hash rate near the 20,000 PH/s threshold. Antpool’s relatively swift recovery from China’s crackdown was likely due to its affiliation with Bitmain, which has been steadily delivering newly manufactured machines to clients. Bitmain’s sales contracts generally give customers favorable terms if they are willing to switch the hash rate to Antpool.

Meanwhile, the second tier has become more crowded than before: ViaBTC, F2Pool, BTC.com, Poolin, Binance Pool and Foundry USA all fall within the range of 10,000 PH/s to 15,000 PH/s.

2. Non-Chinese mining pools are the biggest winners

The chart below shows the changes in hash rate and overall ranking during the period between May 15 and August 5 for the top 15 bitcoin mining pools. (The percentage change in hash rate is shown in green if it increased, red if it decreased, and black if the change during this period was negligible.)

The biggest mover has been Foundry USA Pool. While the Digital Currency Group subsidiary increased its absolute hash rate by 60% over the past 10 weeks, its market share has more than doubled from 3.42% in May to now 8.8% thanks to the decline of its Chinese rivals. 

This means that out of the 900 BTC in the form of block subsidiaries that are up for grab every day, nearly 80 bitcoin would in theory be mined by miners affiliated with the Foundry USA Pool. That number was less than 40 two months ago.

Other non-Chinese pools, such as Prague-based Slushpool, SBI Pool under the Japanese financial giant SBI Group, Russia-headquartered EMCD, and a new competitor — Marathon Digital’s private Mara Pool — have also made substantial gains.

U.S-listed Marathon made headlines last year with its bulk pre-orders of more than 100,000 units of the newest generation of mining rigs from Bitmain. The equipment has been shipped in monthly batches this year and the firm has been gradually plugging it in. A Marathon spokesperson told The Block that as of Aug 5, Mara Pool “only includes” the hash rate from its own miners but it does “anticipate adding other miners and are in the process of doing so.”

Marathon’s monthly mined bitcoin steadily increased from just 50 BTC in January to 442 BTC in July — roughly 2% of the network’s total monthly mining rewards. As of August 1, its operating mining fleet had a hash rate of 2090 PH/s that was powered up by 19,395 miners — the same capacity it had as of June 30.

That means even though Marathon has barely increased its operating hash rate in July, its monthly production has increased by 66% compared to that in June, when it mined 265 bitcoins. “Due predominantly to favorable changes in the global hash rate, July proved to be an immensely productive month for our mining operations,” Marathon’s CEO Fred Thiel said in a statement.

3. Some Chinese pools are more international than you might think

Not all the winners are non-Chinese pools, though. Although the crackdown affected most of the China-based bitcoin mining pools, some of them appear to have a much more internationally distributed client base than many people realized — and for that reason they are relatively better off. 

For instance, Shenzhen-based ViaBTC’s overall market share grew from 8.87% in May to 12.79% now, and ViaBTC is the second largest pool. Beijing-headquartered Rawpool, which has a smaller market share, is another Chinese pool that has been able to grow both its market share and hash rate, which suggests that most of its hashing power has been located outside China.

As can be seen from the table below, June 28 was around when all of the Chinese pools saw the biggest plunge of their real-time hash rate. 

At the time, the total hash rate connected to Shenzhen-based ViaBTC dropped by nearly 20%, much smaller than the drop experienced by major rivals like F2Pool or Poolin, whose hash rate plunged by nearly 60%.

Almost all of the Chinese pools have managed to start recovering their hash rate in July. ViaBTC is now down 12% since May 15 while F2Pool and Poolin are still down about 50% since that date. 

Not of all of them, though. China’s crackdown effectively drained the hash rate connected to two pools that were once notable players: BTC.Top and 1Thash. 1Thash was the private pool under Sichuan-based mining firm Valarhash.

4. Share of exchange pools is declining

China’s crackdown on crypto trading and mining activities appears to have inflicted twice the damage on pools that are affiliated with crypto exchanges that have a large presence in China. Just a year ago, Binance Pool, Huobi Pool and OKEx Pool were among the top 10 largest mining pools, as shown in the chart below, based on historical data from BTC.com. 

But after China’s crackdown kicked in, Huobi Pool’s hash rate declined by as much as 85%, and is still down 75% currently relative to where it was on May 15. 

OKEx started to lose almost all of its shares after October 15 of last year, when it had to suspend asset withdrawals. It managed to recover to just 1,490 PH/s in the months after it resumed withdrawals, and now it has less than 600 PH/s.

The changes for OKEx and Huobi reflect how much these exchanges have relied on Chinese users even though they claim to have moved out of the country in 2017.

Binance’s pool, on the other hand, has gained a slight bump of its market share from 9.87% to 10.17% even though its hash rate has declined from over 16,000 PH/s to now just above 10,000 PH/s. Currently, Binance Pool is the only exchange pool among the top 10 largest power aggregators competing for block rewards.