The U.S. is now the leading country for bitcoin mining, doubling its share in the energy-intensive activity in the four months since China began a cryptocurrency crackdown, according to researchers that track mining activity.

Researchers at the Cambridge Center for Alternative Finance found that the U.S. share of average monthly global hash rate — the computational power used to mint new bitcoin and process transactions — grew to 35.4% in August from 16.9% in April.

Chinese miners held 46% in April, before a ban on new mining in Inner Mongolia and the closure of 26 operations in Sichuan province brought the declared mining activity in China to zero.

The Cambridge bitcoin electricity consumption index, updated on Wednesday, showed Kazakhstan doubled its share to 18.1%, coming in second, followed by Russia with 11%. Electricity in the two countries, both major producers of fossil fuels, costs under 1 cent per kilowatt-hour.

“This confirms the hash rate trajectory identified in the last update (to end April 2021) which showed those three countries were already gaining market share prior to the crackdown in China,” wrote Michel Rauchs, digital assets lead at the CCAF.

The index is derived from the IP addresses of participating bitcoin mining pools.

The price of bitcoin dipped when Beijing’s crackdown culminated in a total ban on cryptocurrency transactions in September but has risen 24% in the past month to $56,007.40 as of Tuesday. As China tightened restrictions, market participants welcomed a decentralization of mining activity and a shift to renewable energy sources.

“The effect of the Chinese crackdown is an increased geographic distribution of hashrate across the world, which can be considered a positive development for network security and the decentralized principles of Bitcoin,” Rauchs wrote.

Pressure on Sichuan province to cut carbon emissions prompted the June crackdown, driving the global hashrate down by 38% that month, according to the researchers. But a “bounceback” was observed in July and August as Chinese mining operations moved overseas. Many moved to Malaysia, whose hashrate share grew from 3.44% in April to 4.59% in August.

Aside from Malaysia’s sizable Chinese-speaking population, miners are also drawn to resource-rich Malaysia’s cheap and stable electricity, priced at $0.05 per kilowatt-hour with a reserve margin as high as 52%.

Oil-rich Canada, Iran, and Norway ranked in the top 10 of the Cambridge index, and in the U.S., energy-producing states such as Texas, Wyoming, and New Mexico are becoming mining hotspots.

“The states that have the most surplus power capacity would be the most attractive, plus of course those that have large, cheap tracts of land,” said Yuriy Humber, founder of the energy analysis platform Japan NRG.

Responding to criticism of cryptocurrency’s carbon footprint amid energy shortages in Europe and China, some in the industry are looking to renewable energy sources or migrating to less energy-intensive mining.

For example, a software update may soon shift Ethereum, the second-biggest cryptocurrency by market capitalization, to proof of stake, which requires existing tokens instead of computing power to reap new tokens.

Todd Rosenbluth, senior director of ETF and mutual fund research at CFRA, told CNBC that crypto-asset investors may have to wait longer for an exchange-traded bitcoin futures (ETF) product.

Speaking on CNBC’s “ETF Edge” on October 12, Rosenbluth stated that a Bitcoin futures ETF is likely to be the first crypto ETF to be approved, but warned that the current gloomy regulatory situation will cause further delays.

He told CNBC:

“We think we’re more likely to see a bitcoin futures ETF first.” 

“It’s a timing issue,” Rosenbluth said. “Does it happen in 2021 or does it move to 2022 so all of these products that … could meet the goals actually are approved and can launch at the same time instead of getting a first-mover advantage?”

“It’s possible — in fact, we think it’s likely — that we’re going to see a delay of a bitcoin futures ETF until 2022 until the regulatory environment is more clear.” 

Jan van Eck, CEO of Van Eck Associates, commented in the same interview that the SEC’s primary concern is the discrepancy between actual Bitcoin prices and the price of the futures contract, the potential for funds to get too large and push the limits on how many contracts they can own, and the risk of cross-border investment.

He said:

“In bitcoin rallies, bitcoin futures strategies can underperform by even up to 20% a year. The SEC wants to have some visibility into the underlying bitcoin markets.”

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