The withdrawal of bitcoin mining from China is a foregone conclusion. In April 2021, data from an academic study reported that Chinese miners account for more than 75% of the Bitcoin network's computing power. However, starting from June 20, this percentage will drop indefinitely.
A video of bitcoin mines shutting down in China's Sichuan province circulated among people's social networks in the cryptocurrency community on the evening of June 19.
Chinese Government documents issued on June 18 showed that for cryptocurrency mining, relevant power companies in Sichuan province needed to complete the shutdown by June 20.
The shutdown came as expected, and with it, the continued decline in bitcoin computing power across the network. As of 00:00 on June 21, OKLink data showed that bitcoin's network-wide arithmetic was 124 EH/s. It was 126 EH/s the day before, down over 30% from its historical peak of 181 EH/s on May 13 this year, and has fallen to the same level as last November.
The withdrawal of bitcoin mining from China is a foregone conclusion due to Chinese regulation. In April 2021, data from an academic study showed that Chinese miners accounted for more than 75% of the Bitcoin network's computing power.
The withdrawal of bitcoin mining from China is a foregone conclusion due to Chinese regulation. In April of this year, data from an academic study showed that Chinese miners accounted for more than 75% of the Bitcoin network's computing power. As of June 20, that percentage will drop indefinitely.
For Chinese miners who still want to continue mining, where will be their new destination?
Texas may become the biggest winner.
News of power outages and mining shutdowns in Sichuan even made it to the Washington Post. It was reported that the founder of the BTC.TOP, Jiang Zhuoer, was described as a 'Chinese bitcoin giant' headed to the United States and plans to move his mining machines to Texas and Tennessee. Some miners share the same thoughts as Jiang Zhuoer already in preparation for shipping containers to load the mining machines on the oil fields of west Texas.
Texas appears to be a favored new location for Chinese miners. Companies like Bitmain, Blockcap, Argo Blockchain, and Great American mining have previously established stations in the state, where the biggest attraction is the abundant and cheap source of electricity.
Texas' cheap electricity prices are based on an infrastructure rich in renewable energy. 20% of local electricity comes from wind energy, and the distribution of electricity is more market-based, allowing customers to select their electricity provider freely. In addition, there are local politicians who support crypto assets, such as Governor Greg Abbott, who has publicly endorsed bitcoin mining as a potentially valuable industry for the United States.
In addition to Texas, Kentucky is also attracting bitcoin miners through policy guidance. In March, Kentucky passed a law offering tax breaks to bitcoin mining companies that invest $1 million to deploy new machines in the state.
The energy-rich and open-policy region of the United States is a good choice for Chinese miners looking to relocate. But the capitalist powerhouse is just as concerned about the environmental impact of bitcoin mining's high energy consumption, especially from liberal environmentalists across the country.
This year, activists in the Finger Lakes region of New York state got into a dispute with a Connecticut private equity firm over the latter's conversion of an old natural gas-fueled power plant into a bitcoin mining facility. As a result, the New York state legislature is considering a bill that would prevent bitcoin mining at the carbon-emitting power plant.
Alex De Vries is a financial economist who has long been a critic of Bitcoin's energy consumption. He predicts that the relocation of Chinese Bitcoin miners will have an impact on "the scale of their energy needs that could be equivalent to a small Western country that needs to move elsewhere," he said. Adding that "finding a new home for all these miners is a huge problem."
Some Chinese mining companies have already built stations in Kazakhstan.
In addition to some regions in the United States, Kazakhstan, which is right next to China, has also become one option for Chinese miners.
China's BIT Mining Limited (NYSE: BTCM) plans to build a bitcoin mining farm in Kazakhstan. It plans to invest more than $9 million to camp a 100-megawatt data center there, and the project is being executed in partnership with two local companies, in which Bit Mining holds an 80 percent stake.
BIT Mining Limited today announced the arrival of the first batch of 320 mining machines with a total computing power of approximately 18.2 PH/S in Kazakhstan, which are expected to be deployed and operational on June 27. As planned, the second and third batches of 2,600 mining machines are expected to arrive in Kazakhstan by July 1, with a total computing power of approximately 102.3 PH/S.
Kazakhstan, which is being eyed by Bitcoin mining, has gradually become a new force in the rise of Bitcoin's computing power in the last two years. Data from Cambridge University's BTC mining tracking tool 'Bitcoin Mining Map ' shows that at one point, Kazakhstan's computing power exceeded 6%, ranking it fourth in the world behind China (65%), the US (7.2%), and Russia (6.9%).
A local miner told Chinese virtual currency circles that Kazakhstan plans to charge a mining tax at the rate of 1 KZT (equivalent to $0.002) per kilowatt-hour starting in 2022. The information has not been authoritatively confirmed.
However, what is certain is that last June, Kazakhstan passed an amendment to a law that clarifies the regulation and taxation of cryptocurrency mining. A flat tax of 15% will be levied on mining in a bid to boost its oil-led economy and counter the economic impact of the Covid-19 epidemic.
Last September, Kazakhstan's digital development minister Bağdat Batyrbekuly Musin said they were in talks to attract 300 billion KZT ($714 million equivalent) worth of investment into the cryptocurrency sector. He disclosed that there are already 13 active mining sites in the country, with another four under construction, and that 'more than 80 billion KZT ($190 million) has been invested in this sector.'
Kazakhstan, which borders western China, seems to be a more convenient option for relocation location. And in terms of sustainable supply of clean energy in the longer term, the policy support and energy conditions in Texas, USA are more appropriate.
On the other hand, China's other neighbor, Russia, is also considered a major crypto computing powerhouse. Its well-known mining site, BitRiver, is located in the Irkutsk region, just a few kilometers away from the 4,515-megawatt Bratsk hydroelectric power plant.
But Jiang Zhuoer expressed concerns about the business environment in Russia in an interview with the Washington Post, saying that his colleagues' mining machines have been confiscated by corrupt police.
Regardless, going abroad has become a foregone conclusion for Chinese miners who want to continue to strike gold in the bitcoin mining industry. However, a more practical issue is that until the global epidemic is still generally under control, both mining machines going abroad and people leaving the country will face cumbersome processes. At this stage, it is a loss of money for miners, a period of declining computing power for the Bitcoin network, and another price slump for the cryptocurrency market.
After June 20, 2021, not a single bitcoin will ever be produced from China.
This article was translated from HiveTech.
