US startup Layer1 to challenge China's long-time dominance in the mining industry

Peter Thiel, a long-time supporter of Bitcoin with a net worth of around $2.3 billion, has invested millions of dollars in the San Francisco-based blockchain startup Layer1. This move will further challenge the mining industry in China.

Peter Thiel, a long-time supporter of Bitcoin with a net worth of around $2.3 billion, has invested millions of dollars in the San Francisco-based blockchain startup Layer1, challenging the Chinese mining industry.

According to a report, Layer1 aims to make the U.S. a hub for environmentally-friendly Bitcoin mining and plans to rapidly expand its mining operations to increase the Bitcoin hash rate in the U.S.

The company's goal is to strengthen Bitcoin's decentralization and use of renewable energy, with a focus on Texas in the future. Texas is known for its low electricity prices, friendly regulations, and abundant renewable energy resources.

Concerns Over China's Dominance in Mining Sector

Since the inception of Bitcoin, China has continued to dominate related mining activities. Apart from being home to the world's largest mining equipment manufacturer BITMAIN, it also has the highest number of Bitcoin miners globally, drawing attention from the crypto community.

A 2018 report co-authored by researchers from Princeton University and the University of Florida highlighted that nearly three-quarters of the Bitcoin network's hash rate is controlled by pools in China.

The report indicated that while the Chinese government does not directly control these mining pools, the pool operators are based in China, indirectly subjecting them to communist government influence.

Layer1's co-founder and CEO Alexander Liegl echoed similar sentiments, stating in a blog:

China controls over 60% of the Bitcoin hash rate. In contrast, the U.S. accounts for only 5% of the network's hash rate.

Potential to End China's Dominance in Mining Sector

Given China's current dominance in the mining sector over other countries, balancing the global hash rate distribution is imperative to solidify Bitcoin's decentralized nature. Layer1 understands this and plans to gradually dilute China's dominant position.

The company is optimistic that further diversifying the global network scale away from China and utilizing underutilized renewable energy can help the U.S. capture over 15% of the Bitcoin hash rate.

In fact, Bitmain is also actively expanding into overseas markets, recently opening a 33,000-acre Bitcoin mining facility in Texas, purportedly the largest Bitcoin mining facility globally.

Furthermore, Bitmain expects to release up to 400 job openings in Houston in the next two years and plans to invest up to $500 million over the next seven years.

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