The Bitcoin mining industry has been in turmoil since mining facilities in China were taken offline on a massive scale. Now more and more miners are relocating their business abroad.
Chinese Bitcoin miners have to harbor ambivalent feelings towards their home country: On the one hand, the Middle Kingdom offers extremely low prices for electricity, which is increasingly also obtained from renewable energies. On the other hand, the often miserable carbon footprint of Chinese mining farms is a thorn in the side of the central government. The fact that the central bank PBoC recently banned the country’s financial institutions from doing business with companies in the crypto sector has further exacerbated the situation of Bitcoin miners, pardon me.
The increasing control of the mining industry in China has resulted in a comparatively sharp decline in the Bitcoin hashrate in recent weeks.
The crypto market has shown, however, that it has not yet fully immunized itself against the bad news made in China, but is increasingly compensating for shocks from the Far East. At least that suggests the rapid recovery in crypto prices after the massive price correction on June 22nd.
Bitcoin: Exodus of the mining industry is looming
While it would be premature to postulate the end of Chinese dominance in Bitcoin mining, there are increasing signs that Chinese miners are increasingly looking for alternative locations. The USA, for example, attract miners from Texas to Miami with cheap (nuclear) electricity. The Texan siren song has already struck the Chinese mining company BIT Mining. A month ago, the owner of one of the largest mining pools (BTC.com) invested around $ 25 million in a new mining facility in Texas.
China is turning off power to miners
The Shenzen-based company is now also looking for new places of work in the immediate vicinity. On June 21st, BIT Mining announced a major export of mining hardware to Kazakhstan. Specifically, 2,600 ASICs are to be delivered to the state on the Caspian Sea by July 1st. In total, the mining devices should be able to produce up to 102 Petahash per second (PH / s). For comparison, at the time of writing, the total hashrate on the Bitcoin network is around 100,000 PH / s (or 100 EH / s).
In the coming quarters, the remaining stocks of mining hardware are to be outsourced to various data centers overseas, according to one Press release the company. BIT Mining also commented on the reasons for the sudden withdrawal. After that, a subsidiary that operates a data center in Shenzen (read: Bitcoin mint) was cut off on June 19. This was done by order of the local energy supplier, the state-run State Grid Sichuan Ganzi Electric Power Co., Ltd. Something similar has recently been observed in the regions of Xinjiang, Yunnan and Qinghai.
Canaan starts its own miners
BIT Mining, meanwhile, isn’t the only mining company looking to Central Asia. The mining hardware manufacturer Canaan has not only announced that it will not only sell its ASICS in the future, but will also operate it itself. And that – surprise – in Kazakhstan.
We believe that our self-operated bitcoin mining business will help us improve our financial performance as well as expand our business scope and customer base. As we incorporate more industry resources into our operations, we believe this segment of the business will enable us to revitalize our inventory of mining machines, shield ourselves from Bitcoin volatility, and ensure that our inventory is maintained in times of Market upswing is sufficient,
called it in the press release on Kazakhstan expansion from Canaan. Kazakhstan has long been one of the top nations in Bitcoin mining. According to data from the University of Cambridge, Kazakhstan’s share of the total hash rate was around 6.17 percent in April 2020. With this, Kazakhstan took 4th place even before China’s current anti-mining campaign. Only Russia (6.9 percent), the USA (7.24 percent) and – of course – China (65.08 percent) mined more at the time.
A look at the electricity prices gives an indication of why the Central Asian state is of interest to the energy-intensive mining business. In 2020, companies in Kazakhstan paid just $ 0.03 per kilowatt hour (kWh) – in China almost three times as much. In Germany, however, it was USD 0.23 per kWh. This is based on data from the website globalpetrolprices emerged. Given the latest developments, it can be assumed that Kazakhstan will further expand its prominent role in Bitcoin mining in 2021.