Geopolitics and Bitcoin Mining: China’s Crackdown Causing Miners to Migrate
The current Bitcoin mining landscape is shifting dramatically.
After all, China appears to be relinquishing its dominance in Bitcoin mining voluntarily. You have probably heard of the stat that upwards of 70 percent of mining operations were in China by 2019.
One would think that China would want to keep that level of enterprise within its borders. However, that appears to be changing because conditions are about to get more challenging for Chinese miners.
This phenomenon speaks to the overall push for more geographical decentralization in mining. The concentration of miners in one territory is not inherently wrong but presents an indirect challenge if harsh regulations are imposed in that country.
Therefore, many miners internationally welcome the possible geographical decentralization despite slight concerns about a domino effect of regulatory crackdown.
China’s Latest Vow to Crack down on Crypto Mining
The Chinese government has made it clear of its displeasure with Bitcoin mining in recent years. This latest crackdown may force over 90 percent of miners to shut down.
Last month, China’s State Council, or cabinet, resolved to come down hard on mining. Additionally, the government has warned financial institutions in the country against handling virtual currencies. China is not known to bluff on policy.
This move is severe and has already begun taking effect. The states of Inner Mongolia, Sichuan, and Xingjian once accounted for more than half of the world’s Bitcoin mining operation. Inner Mongolia was the first to ban mining, and the rest are following through with the nationwide effort.
Vice Premier Liu He made these intentions clear on June 4th. Bitcoin mining is big business in China. There are many ways to view this. It could be the government genuinely frowning on Bitcoin consuming a lot of coal and hydroelectric power in those states.
On the other hand, it could be the actions of a government not happy with the rise of an asset it cannot control. China always has restricted activities that could be a threat to social stability. With the rise of decentralized cryptocurrency, its constant volatility and existence outside mainstream finance are a threat.
Either way, the effect on miners is the same, and more negative measures could be on the way. Bitcoin prices took the biggest hit from Chinese institutions getting warned to avoid Bitcoin. Prices are significantly lower than the highs of March, and the market is closely watching developments in this jurisdiction.
Bitcoin Miners Have Begun Shifting Base
Cryptocurrency miners have started relocating. Large miners like Huobi Mall and BTC.TOP are suspending their operations in China as they scout for friendlier territory.
Quite a number will simply shut down their mining because the costs of moving abroad are too much. The sudden purge of miners from China may have a temporary effect on the Bitcoin hash rate. This effect will linger as Chinese miners shut down and international operations expand.
Others are moving their operations to neighboring countries like Kazakhstan. However, many of these countries in the East Asia region can also change policy suddenly.
Once bitten twice shy.
They may soon follow China’s lead in banning Bitcoin mining, especially if there is a sudden spike in electricity usage.
Therefore, the real prize is North America and Nordic countries. North American countries like the U.S. and Canada have relatively stable regulatory regimes, and such overnight policy changes are unlikely.
Additionally, North America is mainly developed. In the U.S., tons of unused or underutilized warehouses are ripe for harnessing. They are the legacy of the manufacturing exodus, especially from the Midwest.
The level of development in this region means that there is plenty of cheap power. Additionally, many underutilized renewable power sources can be a win-win for miners and clean energy entrepreneurs.
Besides, North America and Northern Europe experience colder weather than the tropics. Countries like Australia may offer advantages in power costs but have hotter climates.
Some regions of Canada experience cold temperatures for much of the year. This factor would be massive for Bitcoin miners who need constant electricity for cooling costs.
Logistical Challenges in Moving Abroad
Some Chinese miners are exploring collaboration with American miners.
Miners like Foundry Digital are reporting an uptick in Chinese miners seeking to sell their miners or get hosting services. The emails and calls are expected to go higher as more Chinese miners look for ways to continue outside China.
These requests have come at a complicated time for many North American miners. Some already had internal expansion operations after the Bitcoin boom of recent months. Mining equipment was selling like hotcakes in early 2021.
This phenomenon led to an equipment supply shortage because equipment manufacturers had their orders filled for months. A global shortage of semiconductor chips made things dicier. Accordingly, large miners like VBit Mining with a direct line to Bitmain had it easier.
Additionally, many miners simply don’t have the facilities or logistical operations to handle the significant demand for new mining operations.
Therefore, it is not a smooth ride getting up to speed. The current effect is that the Bitcoin mining hash rate is declining. This development is likely to have a drag effect on mining difficulty.
Accordingly, miners in the international market with low electricity costs will likely make more mining Bitcoin without adjusting until the hash rate rises again.
VBit Mining: A North American Bitcoin miner providing Professional Hosting Services
They say success comes when preparation meets opportunity.
At VBit Mining, this moment seems tailor-made for us.
We set up shop in 2018 and have since dedicated our efforts to create the perfect conditions for prospective Bitcoin miners.
First, we offer reselling services for those seeking to mine Bitcoin. Sourcing equipment is complicated, and getting a partner with a direct line to Bitmain, the world’s premier manufacturer, is massive.
Mining at home is not easy. Even with the best equipment, the power and cooling bills would drive you nuts. VBit recognized these market needs and sought to make a difference.
We built state-of-the-art hosting data centers in strategic locations in the U.S. These locations provide cheap renewable energy and natural cooling. These complete the checklist for a viable Bitcoin mining enterprise.
The demand from Chinese miners moving abroad could provide a mining renaissance for North America. This is a region teeming with potential because of the massive untapped potential.
Some areas of Canada have underutilized wind and geothermal power sources. The influx of Bitcoin miners provides the required capital necessary to improve these facilities and generate more clean power.
Ultimately, VBit offers professionalism and experience. Bitcoin hosting services are a matter of constant tweaks to repair machines, insure them, provide remedies, and much more possible when mining at scale. Visit the VBit Mining Shop today to learn more about Bitcoin mining!