Bitcoin crackdown sends graphics cards prices plummeting in China after Sichuan terminated mining operations

Graphics cards from companies including Nvidia and Asus saw prices fall by as much as two-thirds on e-commerce platforms amid China’s sweeping bitcoin crackdown

Sichuan, which relies heavily on renewable hydropower, has ordered cryptocurrency mining operations to close down, following Inner Mongolia and Xinjiang

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A bitcoin mine owner stands in front of a wall of cooling fans at his mine, where he houses and operates machines for miners who do not want to move to rural Sichuan, in Ngawa Tibetan and Qiang Autonomous Prefecture, on September 27, 2016. Photo: EPA

Published: 2:00pm, 21 Jun 2021Updated: 11:04pm, 21 Jun 2021

China’s ongoing bitcoin mining crackdown has sent the price of graphics cards plummeting, making the critical component in mining operations much more affordable in the country but leaving miners with fewer places to set up shop.

The Nvidia Quadro P1000 model, an entry-level graphics card, was going for 2,429 yuan (US$376) on a JD.com franchise store on Monday morning, down from a peak of nearly 3,000 yuan in early May, before the State Council’s financial watchdog vowed to crack down on bitcoin mining.

The Asus RTX3060, a more advanced card, was down to 4,699 yuan on Monday from its peak of 13,499 yuan in May on Tmall, operated by JD.com rival Alibaba Group Holding, the owner of the South China Morning Post. The price changes were tracked by e-commerce information provider Manmanbuy.

Graphics cards, typically associated with computers used for video gaming, are an important hardware component for cryptocurrency mining because of the extra processing power they provide for hashing, the complex computations used to create more digital currency and verify transactions on blockchain. The more computational power a miner controls, the better the chances of beating others to adding new blocks to the blockchain and reaping the rewards.

The price plunge comes after southwestern Sichuan province, which relies heavily on hydropower for electricity and had become China’s last bitcoin mining haven, pulled the plug on mining farms on Saturday night. Previous signals from local regulators suggested the province hoped to let miners take advantage of abundant hydropower over the summer.

However, none of China’s major bitcoin mining hubs have been spared from Beijing’s harsh crackdown in the wake of recent price volatility that saw the cryptocurrency’s value plunge by more than 40 per cent in May. Inner Mongolia, Xinjiang and Sichuan had been attractive locations for miners because of their cheap electricity, but they are now hostile environments.

Besides price volatility, the massive amount of electricity needed for the constant hashing that powers blockchains has also become a concern in China, which aims to reach peak carbon emissions by 2030 and become carbon neutral by 2060.