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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
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Bitcoin miners are looking for workarounds to Beijing’s new cryptocurrency crackdown in China, which accounts for two-thirds of global bitcoin mining, with some going underground or looking at moving operations overseas, possibly to places with much more expensive electricity.
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.
Chinese provinces like Inner Mongolia, Xinjiang and Sichuan are no longer the havens they once were for mining operations, which set up shop in these locations because of the relatively low electricity costs. Inner Mongolia has already issued orders to shut down all mining sites, and Sichuan is expected to soon follow suit.
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Is cryptocurrency too risky for China?
Is cryptocurrency too risky for China?
Jiang Zhuoer, founder of mining service BTC.TOP, told the South China Morning Post that he was thinking of moving his company’s machines to North America and Central Asia. “North America has the best security and political environment for mining, but the cost is high. Central Asia is close to Xinjiang,” Jiang said.
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.
Xinjiang alone accounts for nearly 36 per cent of the global bitcoin hash rate, a measure of the total computational power on the global bitcoin network, according to Cambridge University’s Bitcoin Electricity Consumption Index. Sichuan and Inner Mongolia come in second and third, respectively, giving China a 65 per cent share of the global hash rate.
On May 21, China’s Financial Stability and Development Committee, the financial regulatory agency under Vice-Premier Liu He, said the Chinese government would “crack down on bitcoin mining and trading behaviour, and resolutely prevent the transfer of individual risks to the society”. The announcement came in a response to volatile cryptocurrency prices.
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