Chinese Miners Shutting down operations, More Moving to North America
Regulatory clarity is vital in all kinds of crypto enterprises.
Most countries chose to ignore Bitcoin in its first five years of existence. After all, no one had time for a fringe asset that had little traction.
Then something incredible happened in 2017. The once-fringe asset roared into the public consciousness. Since then, Crypto, even with volatility, has generally continued to grow in stature.
Inevitably, governments began to think of ways to regulate this industry. Some went the restrictive route, while others were positive.
Even in 2021, some countries are yet to embrace Crypto. The restrictions affect mining and trading to varying extents. Countries like Algeria, Bolivia, and Morocco ban the holding and trading of cryptocurrencies. Citizens in these countries cannot freely engage in crypto commerce like most others.
Some have a complicated setup. China is an economic powerhouse, and everything it does is global news. The country banned ICOs in 2017 and later restricted cryptocurrency trading. That said, holding Crypto is not expressly illegal.
China places new restrictions on Bitcoin and Crypto Mining
In a significant development, China’s Inner Mongolia region intends to ban new cryptocurrency mining projects and shut down existing activity in a bid to cut down on the energy-consuming operation.
This news is significant for one reason. The Inner Mongolia region is one of the most important Bitcoin mining regions globally. Estimates place the total output to be around 8 percent of the total Bitcoin hash rate. This figure is comparable to the whole of the U.S.
China, as a country, accounts for more than two-thirds of all Bitcoin mining. The government has announced this crackdown in the pretext of reducing electricity consumption in Bitcoin mining.
Bitcoin mining is purposely energy-intensive. Computers have to compete to solve complex mathematical puzzles to earn Bitcoin. Estimates place the total energy consumption of mining to be about 128 Terawatt hours, which is greater than Argentina and the Netherlands.
Inner Mongolia is conducive for miners because it has cheap energy.
However, the Central Government has energy targets which the Inner Mongolia region did not meet. This ban by the regional government intends to make up for the discrepancy. Inner Mongolia is perfect because it is naturally cold and has loads of cheap energy. These are ideal conditions for mining.
Miners in the region are in a tailspin trying to figure the next move. Bitcoin mining is a logistical nightmare. Such overnight legal changes bring great uncertainty.
Incidentally, China is researching a national digital currency. This move complicates the regulatory landscape in the most vibrant Bitcoin mining jurisdiction. The Central government seemed to have changed track on blockchain assets in 2019. Miner and traders hoped that this stance would see a total embrace of Crypto in the country.
Bitcoin Miners Looking for Better Jurisdictions
Now that the Chinese government has declared war, miners need to find alternative solutions. Stopping mining altogether is one solution. However, mining is too lucrative for the miners in Inner Mongolia to simply down tools.
Mining illegally is no solution either. China’s legal system does not leave much wiggle room for those who stand up to the government.
The apparent remedy for most is to move mining operations elsewhere. It would be cheaper to move them to other regions of China. However, the government has new carbon-reduction goals.
Inner Mongolia happens to generate significant amounts of energy from coal mining. However, there is no guarantee that the government will not ban mining in other regions that mostly use hydroelectric power.
The aftershocks are immediate. Mining company Weminer, which is based in Beijing, announced on Weibo that it would suspend several projects in the region. Other companies are looking to move to areas like Sichuan province.
Those that can afford it are exploring leaving China altogether. The target is countries that provide affordable electricity without stringent regulations. Nordic Countries and North America look attractive because some parts are naturally cool with cheap energy.
The creation of Bitcoin mining migrants is now a thing. Even Iran has experienced a surge in mining activity, which is odd for a country without a great human rights record. It appears that miners primarily concern themselves with the policies around Crypto and energy sourcing.
North America Makes Sense for Bitcoin Mining Businesses
The U.S. has a more predictable regulatory landscape. It is unlikely for a state to ban Bitcoin mining overnight and place miners in limbo. The U.S. government has not expressed adverse intentions towards Bitcoin mining.
Notably, the major quarrel the government has had is over the security aspects of specific cryptocurrencies. The SEC filed a lawsuit against Ripple Labs because XRP allegedly violated securities laws. This issue does not arise for Bitcoin because it did not have such crowdfunding dimensions.
Therefore, mining Bitcoin in the U.S. is more reliable from a regulatory perspective. Furthermore, the U.S. has some conditions that suit Bitcoin mining. Rural America faced the brunt of manufacturing jobs moving overseas for decades. There are tens of thousands of warehouses that remain unused or underutilized today.
These facilities can be converted into data centers. Additionally, there are many states in the U.S. with cheap renewable power and natural cooling. States like Colorado and Montana are excellent for mining Bitcoin.
Therefore, North America can become the next destination for Bitcoin miners. Besides, it will help redistribute Bitcoin mining globally. China controls over 70 percent of the global mining hash rate. This amount is unhealthy even though most mining farms work independently.
A Bitcoin mining regime with power redistributed in excellent. This change would move Bitcoin closer to Satoshi Nakamoto’s dream of a borderless and trustless currency.
Additionally, if China is cracking down on mining for Carbon footprint concerns, the USA can help. This country has plenty of underutilized renewable energy.
John Kerry, Biden’s new climate envoy, has previously stated that cryptocurrencies do have value. If this administration invests more in renewable energy, it bodes well for miners seeking new solutions.
VBit Technologies: A North American Bitcoin Mining Host Utilizing Renewable Energy
The North American regulatory landscape offers better clarity. For this reason, we set up shop in Philadelphia in 2018 and began operations. VBit Mining is a professional equipment reseller that also provides hosting services for Bitcoin miners.
We share the vision of sustainable mining. This is why we set out to utilize cheap renewable energy in various parts of North America. Our new data center will be in Montana to capitalize on inexpensive hydroelectric power in the state.
Miners move to the U.S. dream of such a setup. There is a low possibility that the U.S. government will place the kinds of restrictions that China has. This level of certainty has allowed us to think of expansion.
Accordingly, VBit Mining relies on Antminer S19 and S19 Pro miners from Bitmain. The elite equipment provides an edge in the market with the equipment crunch that has hit the industry. Demand is now very high, with Bitcoin prices going through the roof.
Our commitment to renewable energy will guide future operations. The U.S. has plenty of unrealized potential in Bitcoin mining.