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Shanghai: China’s sweeping cryptocurrency mining ban has crippled an industry that accounts for more than half of global bitcoin production, as miners throw machines out of desperation or seek refuge in places like Texas or Kazakhstan.
“Many miners are leaving the company to comply with government policies,” said Mike Huang, operator of a cryptomining farm in southwest Sichuan Province. “Mining machines sell like junk.”
The local government of Sichuan, the second largest bitcoin mining center in China after Xinjiang, banned crypto mining a week ago.
The Chinese State Council, or cabinet, pledged to crack down on bitcoin trading and mining in late May, seeking to head off financial risks after the global bitcoin mania revived China’s speculative crypto trade. -coins. The crackdown comes as China’s central bank tests its own digital currency.
Chinese authorities say cryptocurrencies disrupt the economic order and facilitate illegal asset transfers and money laundering. Analysts say Beijing is also worried about potential competition for the digital yuan and that the energy-intensive activity of bitcoin mining could harm the environment.
Following Beijing’s call, major Chinese cryptocurrency mining centers, including Inner Mongolia, Xinjiang, Yunnan and Sichuan, unveiled detailed measures to eradicate the company.
Bitcoin prices plunged below $ 30,000 this week, less than half of their April record highs, as global investors worried about disruptions in a hitherto important market.
“If the government doesn’t allow it (cryptomining), I just have to quit,” said Liu Hongfei, a mining project operator in southwest China’s Yunnan Province. “You are not fighting the Communist Party in China, are you?
According to an estimate by Adam James, editor of OKEx Insights, up to 90% of all mining activities in the country could be banned in China. Bitcoin and other cryptocurrencies are created or “mined” by high-powered computers, or platforms, competing to solve complex mathematical puzzles in a process that uses electricity extensively.
Most miners in China “shut down their machines and sell them,” said Nishant Sharma, founder of BlocksBridge Consulting, a consulting firm focused on the crypto mining industry.
In the wake of China’s shutdown, “every mining operation outside of China benefits immediately,” as their mining reward, which is proportional to their share of the bitcoin network’s global hash rate, a measure of the power of treatment of minors increases automatically, said Sharma.
“This is the end of an era for crypto mining in China,” said Winston Ma, assistant professor at NYU Law School.
Move
Prices for mining rigs fell on the mainland after the ban.
A machine that sold for around 4,000 yuan ($ 620) in April and May, could now be bought for as little as 700 to 800 yuan, a Sichuan miner said.
Bitmain, China’s largest maker of cryptocurrency mining machines, said on Friday it had suspended sales of its products and was looking for “quality” power supplies overseas alongside its customers, in places like the United States, Canada, Australia, Russia, Kazakhstan, and Indonesia. .
Some large Chinese miners are already venturing abroad.
BIT Mining announced on Monday that it had successfully delivered its first batch of 320 mining machines to Kazakhstan. A second and third batch, totaling 2,600 machines, will be delivered to the Central Asian country by July 1.
“We are accelerating our overseas development for high quality alternative mining resources,” CEO Xianfeng Yang said in a statement. BIT Mining has also invested in cryptomining data centers in Texas.
Huang Dezhi, who operates a mining farm in Sichuan, said his team is also exploring possible foreign destinations such as Kazakhstan.
“If the government does not reverse the policy, we will have no other choice. You cannot challenge the decisions of the central government,” Huang said.
A project manager who identified himself only as Mr. Sun said he had offered to help local miners settle in Russia, but demand for his services has so far been lukewarm.
“Big risks if you move machinery overseas, because you are effectively giving up control of your assets,” said Sun, who also secures the supply of fresh electricity in southern Guangdong province. China, where the restrictions are less stringent.
Some minors hope that the ban will eventually be relaxed.
“The power supply was cut off, but we were not ordered to demolish the project,” said Wang Weifeng, a miner from Sichuan. “We are therefore adopting a wait-and-see attitude. There remains a glimmer of hope.”
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