Bitcoin miners: China’s cryptocurrency crackdown pushes companies overseas
- Large bitcoin mining companies are looking at moving to North America and Central Asia after taking advantage of cheap electricity in China
- Beijing recently announced a new crackdown on bitcoin mining in response to volatile price swings, but the country still accounts for 65 per cent of mining
A few big operators have halted China operations and are relocating mining projects to North America or Central Asia. Small miners, sometimes just individuals who keep a few computers humming at home, may choose to keep operating while hoping regulators do not go after them.
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Moving operations out of China is only part of the cost he is facing, though. Taking the machines offline means losing out on what Jiang estimates to be two to four weeks of time that could be spent mining more cryptocurrency.
BTC.TOP, Huobi and HashCow – all major mining companies in mainland China – have since halted all or part of their mining operations in the country.
“It takes time for the signal from the central government to pass on to local governments, which will take different enforcement measures,” said Benjamin Gu, a blockchain and cryptocurrency expert who founded Liyan Consulting. “Inner Mongolia has banned mining, while Sichuan provincial officials will hold a meeting to study the issue on June 2.”
Jiang said on the microblogging site Weibo that he does not think that mining will be immediately killed off in China. He estimates that the industry has an annual output of 100 billion yuan (US$15.7 billion) and employs hundreds of thousands people.
Even if the government forced mining companies to shut down, it might afford the industry time to handle the process. When Beijing banned cryptocurrency exchanges in 2017, companies had a few months to shut down or move overseas, Jiang said on Weibo.
The new policies might kill large-scale mining farms, Jiang said, but not individual miners.
One miner from China’s southern Guangdong province, who asked for anonymity due to the changing regulatory environment, said the latest crackdown took him by surprise, but he does not plan to stop mining at home.
“It’s hard to enforce [a ban on individuals], as individual miners are too small to be spotted,” he said. His three-laptop mining rig only adds 108 yuan on his monthly power bill, he said, while generating about 2,100 yuan in cryptocurrency.
Larger mining operations looking to get out of the business might also be looking to offload some of their equipment. If that happens, though, it is unlikely to have much of an effect on the price of mining machines, according to Nishant Sharma, founder and chief executive of the cryptocurrency-focused consulting firm BlocksBridge.
“The supply crunch of mining machines is more severe than ever before, a result of the ever-increasing demand and the global chip shortage,” Sharma said, noting that cryptocurrency miners need to place orders with manufacturers six to 12 months in advance for the newest models.