In China, some Bitcoin miners continue to operate despite the country’s recent crypto ban. Most use a combination of grid power and hydropower and bypass their IP addresses in order to preserve their income.
Despite the ban on crypto activity in China, Bitcoin miners work stealthily and survive using off-grid power sources. Following this crackdown, several Chinese miners have turned to more crypto-friendly countries in North America and Central Asia. But those who cannot afford to move found themselves without an income overnight.
In addition, some have remained in the country due to travel restrictions linked to the pandemic, supply chain issues and lack of contacts and money overseas.
Since the recent ban, Bitcoin miners have used a combination of the power grid and hydropower. Those who have chosen the option of hydroelectric power use the dams scattered throughout the provinces of Sichuan and Yunnan. Indeed, these roadblocks are discreet and less likely to attract the attention of the government. This is especially true during the rainy season, which begins in May and ends in late fall. Miners build their own infrastructure to make the energy of the dams compatible with their mining equipment.
As an example, one of these miners currently has two sites (8 megawatts and 12 megawatts) that use VPNs to evade government controls. Note that the operator China Telecom is currently acting as a monitoring body for mining activities.
On the other hand, Qihoo 360, a Chinese cybersecurity company recently published a report on mining in China. The document reveals that Bitcoin miners continue to operate despite the crypto ban in the country. In addition, it indicates that every day 109,000 IP addresses perform mining activities. That said, some miners are turning to mining pools to cover up their operations.
Overseas mining pools come to the rescue of bitcoin miners in China
Mining pools are also becoming increasingly popular with Chinese miners who wish to escape the authorities’ radar. This is because when a block is resolved, the name of the mining pool is often associated with the block in the public ledger, allowing Bitcoin miners to go unnoticed. In addition, data packets from Chinese data centers are encrypted to appear like ordinary web traffic to any entity monitoring the data exchange.
On the other hand, overseas mining pools also help Chinese data centers to solve some technical issues. Additionally, they can mask the number of unique IP addresses emanating from a data center. Indeed, having many IP addresses is also a red flag for the government.
Finally, only time will tell if the seasonal fluctuations will lead to a new exodus of mining equipment and miners. This is because with the change of seasons, Bitcoin miners will not be able to move to Inner Mongolia and Xinjiang, as has been done in the past to access coal-fired electricity.
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