Who will accept the Chinese miners of Bitcoin?

The fluorescence emitted by rows of Bitcoin mining machines went out. On the evening of June 19, a video of the shutdown of Bitcoin miners in Sichuan was circulated on the social network of people in the currency circle, telling helplessness through the background music of “Bye”.

Who will accept the Chinese miners of Bitcoin?

The “Notice of Sichuan Development and Reform Commission and Sichuan Energy Bureau on Clearing and Closing Virtual Currency “Mining” Projects” issued on June 18 shows that for virtual currency “mining”, relevant power companies in Sichuan need to Complete the screening, clean-up and shutdown work before June 20.

The shutdown came as scheduled, followed by the continued decline of Bitcoin computing power across the network. As of 0:00 on June 21st, OKLink data shows that Bitcoin’s entire network computing power was 124 EH/s, compared with 126 EH/s the day before, which is a drop of over 30% from the historical peak of 181 EH/s on May 13 this year. , Has dropped to the level in November last year.

Affected by Chinese regulation, the withdrawal of Bitcoin mining from China is a foregone conclusion. In April this year, academic research data showed that Chinese miners accounted for more than 75% of the Bitcoin network computing power. From June 20, this ratio will drop indefinitely.

Nowadays, going to sea is an inevitable choice for miners who still want to continue mining. So, where will their new home and new starting point be?

Texas may become the “biggest winner”

The news of the power outage in Sichuan and the shutdown of the miners even appeared in the “Washington Post”. In the report, the founder of Lebit Mining Pool, Jiang Zhuoer, was described as a “Chinese Bitcoin giant” who was going to the United States. He planned to send him Mining machines moved to Texas and Tennessee. Already, a miner with the same idea as Jiang Zhuoer is preparing a shipping container, planning to install his mining machine on an oil field in western Texas.

Texas seems to be a new location for Chinese miners. Companies such as Bitmain, Blockcap, Argo Blockchain and Great American Mining have previously “built stations” in the state. The biggest attraction there is abundant and cheap electricity. Resources.

In February of this year, people were shocked by the news of “65 yuan per kilowatt-hour of electricity” in Texas. It was at the time of winter storms in many states across the United States. Millions of homes and businesses had power outages. Texas was more seriously affected. Electricity prices have soared by 200 times. But if you calculate it carefully, before the surge, 1 kilowatt-hour of electricity in Texas, the United States, was around 5 cents, equivalent to more than RMB 3 cents. This price is almost equivalent to the mining electricity price during the high water period in Southwest China.

The cheap electricity price in Texas is based on the abundant renewable energy infrastructure. 20% of the local electricity comes from wind energy, and the electricity distribution is more market-oriented, and users can freely choose electricity suppliers. In addition, there are local politicians who support crypto assets, such as Governor Greg Abbott, who has publicly supported Bitcoin mining and believes that this may be a valuable industry for the United States.

In addition to Texas in the United States, Kentucky is also adopting policy guidance to attract Bitcoin miners. In March of this year, this coal-rich region passed a law that provides tax incentives for Bitcoin mining companies that invest $1 million in new machines in the state.

Areas with abundant energy and open policies in the United States are indeed a good choice for Chinese miners who want to relocate. But this world-class capitalist country also cares about the environmental impact of the high energy consumption of Bitcoin mining, especially liberal environmentalists everywhere.

This year, activists in the Finger Lakes area of ​​New York had a dispute with a private equity firm in Connecticut, because the latter converted an old natural gas-fueled power plant into a Bitcoin mine. Therefore, the New York State legislature is considering a bill to block Bitcoin mining at carbon-emission power plants.

Alex de Vries, a financial economist who has long criticized Bitcoin’s energy consumption, predicts that the migration of Bitcoin miners in China will have an impact. “The scale of its energy demand may be equivalent to a small western country that needs to move elsewhere.” Said, “Finding a new home for all these miners is a huge problem.”

Already Chinese mining companies have established stations in Kazakhstan

In addition to some areas in the United States, Kazakhstan, which is close to China, has also become one of the choices of miners. And Honeycomb Finance noticed that as early as May 24, a Bitcoin mining company headquartered in Shenzhen released news and chose to go to the sea “neighboring countries.”

A month ago, Bit Mining, formerly known as “500 Lottery Network”, was seen in overseas media news due to plans to build Bitcoin mining in Kazakhstan. Bit Mining plans to invest more than US$9 million to build a 100 MW data center locally. The project is executed in cooperation with two local companies, of which Bit Mining holds 80%. According to reports, the relevant cooperation of the project will take effect on July 1, 2021.

It is worth noting that just three days before the news was exposed, that is, on May 21, a meeting of the Financial Stability and Development Committee of the State Council made it clear that it “combated Bitcoin mining and trading.” From this day onwards, China’s Bitcoin miners, such as Inner Mongolia, Xinjiang, and Sichuan, have successively implemented policies and started to clean up Bitcoin mining companies.

It seems that Bit Mining is extremely sensitive to policies, and it seems that it had no illusions about continuing to engage in mining in China at that time. In May, the company also announced an investment of 25 million US dollars to build a new data center in Texas, USA. This investment is one of the agreements it signed with Dory Creek, a wholly-owned subsidiary of Bitdeer, a mining machine and cloud computing power company. The two companies plan to Construction and operation of a 57 MW mining facility, mainly using low-carbon energy.

Kazakhstan, which is favored by Bit Mining, has gradually become a new force in the rise of Bitcoin computing power in the past two years. According to data from the BTC mining tracking tool “Bitcoin Mining Map” of the University of Cambridge, Kazakhstan’s computing power exceeded 6% at one time, ranking fourth in the world, second only to China (65%), the United States (7.2%) and Russia ( 6.9%).

Some local miners revealed to people in the domestic currency circle that Kazakhstan plans to charge a mining tax at a price of 1 tenge per kilowatt hour (ie, the local currency unit, equivalent to 0.002 US dollars) from 2022. This information has not been verified by authority.

But it is certain. In June last year, Kazakhstan passed a legal amendment that clarified the regulation and taxation of cryptocurrency mining. It will impose a 15% fixed tax on mining in order to promote its oil-led economy. And respond to the economic impact of the new crown epidemic.

Three months later that year, the country’s Minister of Digital Development, Baghdad Musin, stated that they were negotiating to attract investment worth 300 billion tenge (that is, the local currency unit, equivalent to 714 million U.S. dollars) into the cryptocurrency field. He disclosed that there are already 13 operating mines in the country and another 4 are under construction. “This industry has invested more than 80 billion tenge (190 million US dollars).”

From the perspective of the location of migration, Kazakhstan, which borders western China, seems to be a more convenient choice. From the perspective of sustainable clean energy supply in the longer term, the policy support and energy conditions of Texas in the United States are more certain.

In comparison, China’s other neighbor, Russia, can also be regarded as a country with large computing power. The country’s well-known mining farm BitRiver is located in the Irkutsk region, only a few steps away from the Bratsk Hydropower Station, which generates 4515 MW. A kilometer away, the all-inclusive electricity price is said to be lower than Sanmao, which is comparable to the electricity price of domestic mining.

But Jiang Zhuoer expressed his concerns about the business environment in Russia in an interview with the Washington Post. He said that his colleague’s mining machine had been confiscated by corrupt police.

In any case, for Chinese miners who want to continue digging for gold in the Bitcoin mining industry, going to sea has become a foregone conclusion. However, a more practical problem is that before the global epidemic is still under control, whether it is mining machines going to sea or people going abroad, they will face cumbersome procedures. At the current stage, it is a loss of money for miners; for the Bitcoin network, it is a period of decline in computing power; for the market, it is another low ebb in price.

In the summer after June 20, 2021, the wet season in Sichuan will remain, but since then, there will no longer be a Bitcoin produced in China.

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