China declared war on bitcoin miners. Since March, at least five provinces in the Asian country have determined the closure of companies in the sector. The last was Sichuan, which in one shot brought down 26 farms.
Yunnan Province’s Department of Energy confirmed on Saturday, June 12, that by the end of June all illegal Bitcoin mining in the region will be halted.
The agency identified the illegal operations after an inspection, which is expected to be completed by the end of June. “Once discovered, they will immediately be forced to shut down,” local reports quoted.
These documents were confirmed by Bitcoin miners in a WeChat group seen by Decrypt.
Chinese crypto blogger Wu Blockchain tweeted: “This is inaccurate and should be verified by multiple miners in China. The government documents circulating on the Internet today are false. Yunnan mainly uses green hydropower, and the miners have not stopped all of them for the time being.”
This is inaccurate and should be verified by multiple miners in China. The government documents circulating on the Internet today are false. Yunnan mainly uses green hydropower, and the miners have not stopped all of them for the time being. https://t.co/5twaWS55LY
— Wu Blockchain (@WuBlockchain) June 11, 2021
Hours later Wu Blockchain tweeted again, quoting local media reports on the mining crackdown: “Energy Bureau of Yunnan Province confirmed to the media that it will complete the rectification of illegal Bitcoin mining by the end of June, such as non-payment of taxes and fees, private power connection, and hidden safety problems.”
Energy Bureau of Yunnan Province confirmed to the media that it will complete the rectification of illegal Bitcoin mining by the end of June, such as non-payment of taxes and fees, private power connection, and hidden safety problems. https://t.co/963qPGlId5
— Wu Blockchain (@WuBlockchain) June 12, 2021
Impacts of China’s expulsion of bitcoin miners
In the short term, this crackdown generates FUD, “fear, uncertainty and doubt”,a strategy used by several companies that spread false news and rumours, creating misinformation, fear and panic in people, with some intention behind this act.Bitcoin, for example, briefly traded below $30,000 on the 22nd — the lowest price since January.
In the long term, the Chinese crackdown has the effect of changing the position of the ‘pieces’ of the global mining scenario, dominated by the Asian country itself, which concentrates 65% of the computing power, according to the index electricity consumption Bitcoin, from the University of Cambridge.
“The map is based on geo-location data (ie IP addresses) of hashers connecting to the Bitcoin mining pools BTC.com, Poolin, and ViaBTC, who have kindly agreed to share aggregate-level data for research purposes.”
Bitcoin Migration
The Asian nation is in the midst of an exodus of mining companies, who have already started to migrate to other countries. The United States, which has 7% of the world’s mining power, is one of the destinations.
In the coming days, the Fenghua International Transportation, a Chinese logistics company, to transport by air three tons of the Asian nation mining equipment for the North American country, according revealed to journalistEunice Yoon, CNBC.
#China logistics firm in Guangzhou confirms to @CNBC it’s airlifting 3,000kg (6,600lbs) #bitcoin mining machines to Maryland, USA. Fenghua International advertises products delivered to door, tax on both ends cleared. Price per kilo: as low as $9.37! #cryptocurrencies pic.twitter.com/8yUjZjhpkk
— Eunice Yoon (@onlyyoontv) June 21, 2021
The journalist adds: “And so the mining power starts to shift to the US. Fun times ahead. One day China will look back on this moment and ask why they thought it was a good idea.”
Rudá Pellini, co-founder and head of new business at Wise&Trust, a digital asset manager based in New York (USA), said he has noticed an increase in the demand for Chinese miners in the country.
“This migration has been taking place consistently over the past two years, and it tends to increase even more now.”
He said he sees this change in the global scenario as positive, as the US has a more open and competitive business environment.
“In China, energy consumption agreements basically work through incentives and power is very much in the hands of public authorities. Here, each state has specific rules and laws for the energy issue, allowing different types of agreements with private entities”.
David Marcus, co-creator of Facebook’s cryptocurrency project, also said earlier this week that the move of miners to the country is positive, as it could help in the development of the cryptocurrency.
Texas, Wyoming and Florida have already shown themselves to be receptive to industry entrepreneurs. Miami, for example, wants to use cheap nuclear power to attract bitcoin miners.
Not every region of the US, however, opened its arms to the market. Congresswoman Anna Kelles, for example, tried to pass a bill in New York aimed at suspending mining for three years because of environmental issues. The proposal did not go ahead only because of the action of union members.
Migration to Kazakhstan
Another Destination for miners is Kazakhstan. In a statement released on Monday, June 21, BIT Mining, located in Shenzen, Guangdong province, said it had already shipped part of its equipment to Kazakhstan.
The first batch, consisting of 320 machines with 18.2 pentahashes per second (PH/s) of computing power, was shipped this week. The second, with over 2,600 miners with 102.3 pentahashes, would arrive in the country on July 1st. In executing its overseas deployment strategy, the company expects to ship its remaining mining machines to overseas data centers in the coming quarters.
Kazakhstan has attracted miners because — like China — it has cheap energy. The country occupies the fourth position in the ranking of computing power, behind only the Asian nations, the United States and Russia, in second and third places, respectively.
