Video - Bitcoin Q and A Why has Mining Centralised in China
Centralized payments are a powerful force for centralization of the web, creating platforms for content and services that are centralized around a payment processor/aggregator. What happens when payments themselves become decentralized? The nexus of centralization dissolves and the content platforms can become decentralized too. In this talk presented at the Los Angeles Bitcoin Meetup, Andreas examines the impact of payments and the re-decentralization of the web
Mining centralisation is the result of the hash rate’s rapid acceleration, going from CPU mining to ASIC mining to catch up with Moore’s Law. There a reasons mining has centralised in China. They have experienced enormous growth in electricity generation in the last twenty years but with poor distribution networks, so there is a lot of extra capacity that is wasted.
If you have an excess of electricity generation, you can either turn it back off (which can take several hours) or you make money mining during the lull in demand. One Chinese mining farm partnered with a hydroelectric plant in a tiny village. Bitcoin is a battery, it is an energy storage mechanism.
The current incentives are to keep mining in China. There’s a disparity between political power and electrical power. This represents the best of entrepreneurial capitalism in a country that desperately needs it, which we should applaud them.