SHANGHAI, June 25 (Reuters) – China’s sweeping ban on cryptocurrency mining has crippled an industry responsible for more than half of global bitcoin production as miners desperately offload machines or seek refuge in places like Texas or Kazakhstan.
“Many miners are leaving the business to comply with government guidelines,” said Mike Huang, operator of a crypto mining farm in southwest Sichuan province.
“Mining machines sell like scrap.”
The local government of Sichuan, China’s No. 2 Bitcoin mining center after Xinjiang, issued a ban on crypto mining a week ago. Continue reading
China’s State Council or Cabinet promised to crack down on Bitcoin trading and mining in late May to stave off financial risk after global Bitcoin mania revived Chinese speculative trading in cryptocurrencies. 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 concerned about potential competition for the digital yuan and that the power-hungry business of bitcoin mining could harm the environment.
Following Beijing’s call, China’s top cryptocurrency mining hubs, including Inner Mongolia, Xinjiang, Yunnan and Sichuan, have announced detailed measures to eradicate the business. Continue reading
Bitcoin prices fell below $ 30,000 this week, less than half of their April high, as global investors worried about disruption in a previously large market.
“If the government doesn’t allow it (crypto mining), I’ll just have to stop,” said Liu Hongfei, an operator of mining projects in southwest China’s Yunnan Province.
“You are not fighting the Communist Party in China, are you?”
According to an estimate by Adam James, a senior editor at OKEx Insights, China’s ban on Bitcoin mining could cause up to 90% of all mining in the country to go offline.
Bitcoin and other cryptocurrencies are created or “mined” by powerful computers or rigs that compete to solve complex mathematical puzzles in a process that uses intense electricity.
Most miners in China “take off their machines and sell them,” said Nishant Sharma, founder of BlocksBridge Consulting, a consultancy focused on the crypto mining industry.
As a result of China’s shutdown, “any mining operation outside of China will benefit immediately” as their mining reward, which is proportional to their share of the Bitcoin network’s global hash rate – a measure of miners’ computing power – automatically increases, Sharma said.
“This marks the end of an era for crypto mining in China,” said Winston Ma, associate professor at NYU Law School.
After the ban, prices for mining rigs on the mainland plummeted.
A machine that sold 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 manufacturer of cryptocurrency mining machines, said on Friday that it has stopped selling its products and is looking for “quality” power supplies in addition to its customers abroad, including in the US, Canada, Australia, Russia, and Kazakhstan Indonesia. Continue reading
Some great 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 with a total of 2,600 machines will be delivered to the Central Asian country by July 1.
“We are accelerating our overseas development for alternative high-quality mining resources,” said CEO Xianfeng Yang in a statement. BIT Mining has also invested in cryptomining data centers in Texas.
Huang Dezhi, who runs a mining farm in Sichuan, said his team is also exploring possible destinations overseas like Kazakhstan.
“If the government doesn’t reverse policy, we have no choice. You can’t oppose the decisions of the central government,” said Huang.
A project manager who identified himself only as Mr. Sun said he had offered to help local miners move to Russia, but demand for his services has so far been subdued.
“Big risks if you move machines abroad because you are effectively giving up control of your assets,” said Sun, who also provides fresh electricity in China’s southern province of Guangdong, where restrictions are less stringent.
Meanwhile, some miners hope that the ban will be relaxed at some point.
“Power was cut, but we were not ordered to demolish the project,” said Wang Weifeng, a Sichuan miner.
“So we take a wait and see attitude. There remains a ray of hope.”
($ 1 = 6.4663 Chinese Yuan)
Reporting by Samuel Shen and Andrew Galbraith Editing by Vidya Ranganathan and Raju Gopalakrishnan
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