China has long been the center of Bitcoin mining around the world, making the amount of electricity it consumes into crypto network & mining enormous.
According to the Cambridge University Financial Center, as of April 2021, more than 65% of cryptocurrency mining centers are concentrated in China. But after the country's government stressed its stance of "suppressing Bitcoin mining and trading practices" on May 21, a series of Bitcoin miners sought to flee the world's most populous country.

Robert Van Kirk, chief executive officer of digital marketplace Kaboomracks, said that Chinese miners are frantically selling off their equipment, even as the government has only threatened but not yet issued a formal regulation.

Many used mining rigs are being sold for cheap, sometimes 40% less than the original price. Chinese manufacturer Canaan said that the price of excavators has dropped by 20-30% since the beginning of May, according to Reuters.

Van Kirk said the miners liquidating the excavators may be because they are running out of time to rent mining centers located in certain areas of China, where there are favorable electricity prices and optimized infrastructure. optimization. In addition to the government announcement, they decided to sell them instead of renewing the contract.

Currently, many mining companies are planning to relocate their headquarters elsewhere. An unnamed source said that many miners are panicking to transport machines to neighboring Kazakhstan overnight. Those who did not respond in time, intend to temporarily close the mining camp and then continue to operate more discreetly.

Didar Bekbauov, founder of Kazakhstan-based company Xive, which helps miners find where to locate machines and energy contracts in China, said that for the past two weeks, he has received countless calls every day for the past two weeks. from cryptocurrency mining companies that want to move to Kazakhstan.

"These people are waiting for an official action from the Chinese authorities and are looking for plan B in case mining is banned," Bekbauov said.

Kazakhstan accounts for more than 6% of world production thanks to cheap electricity and a relatively cold climate. The country also borders China, especially the Xinjiang region, where a third of China's cryptocurrency mining takes place.

Bekbauov estimates that mining capacity in Kazakhstan could double in the near future, but it could also be a temporary stopover for miners as they look to build a mining facility. in places like North America.

In addition to Bekbauov, Alex Brammer, vice president of Luxor Tech in the US, also received a series of calls from Chinese miners just hours after Beijing made the announcement on May 21. "We get pretty much the same question in the form of 'Can you install 20,000 miners in 14 days?' in a very panicked tone," he said.

In addition, Brammer said many miners will leave China within the next 30-90 days.

Foreign businessmen will likely be the first to flee China. Van Kirk said many of his clients are Westerners living in China but want to find new mining locations in the US or Canada.

Besides North America, Northern Europe or Latin America is also considered a potential land for cryptocurrency mining. Many want to move to a place that is politically stable, property rights are upheld, and has a solid and mature legal framework. Among them, the US, the world's second largest Bitcoin mining country, is considered an attractive destination.

That's the theory, but it's not that simple in practice. They will have to move tens of thousands of machines from China to the US, especially in the context of the global pandemic causing a shortage of shipping containers, not to mention the US-China tensions that will cause companies looking to move. Goods from China to the US are subject to tariffs of up to 25%.

Even with successful shipping, setting up the facility will take a long time. Brammer estimates that it takes 12-24 months to build a Bitcoin mining camp. "Some Chinese miners wanted to buy 500 megawatts of electricity, but US power facilities and mining farms had to refuse because they couldn't afford it," Brammer said.

Edward Evenson, business development manager at Brainins, is more optimistic. According to him, most large companies will easily move machines to new locations, while small companies without resources or relationships will have to liquidate. In fact, most of the miners are not in a hurry to evacuate but are waiting for the government's next move.

Ian Wittkopp, vice president of Sino Global Capital, said: "Chinese miners have a higher risk tolerance than Western miners. They have experienced similar regulatory shocks. Transportation costs Moving machinery can be expensive, so most people wait for more clear news before taking action."

This is not the first time the Chinese government has dealt a blow to Bitcoin. "Whenever the price of Bitcoin rises and there's a speculative rush around the cryptocurrency, the Chinese government makes an announcement. They've been doing this since 2013," Evenson said.

This time may be different, as Vice Premier Liu He personally makes the announcement also means that the government has a more assertive action plan. Previously, the government of Inner Mongolia proposed banning Bitcoin mining and officials in Sichuan are also planning to follow.

Not to mention, the level of investment in Bitcoin is increasing. Evenson believes that once that much capital has been invested in a project, no one wants to continue to face the current precarious situation, so miners will look for a more stable environment to operate.

Currently, it is difficult to predict how Bitcoin will change in China. If the country implements a drastic repression policy, the world's Bitcoin mining network will be scattered everywhere. However, this also eases the concerns of many crypto believers who believe that the excessive concentration of islanders in an authoritarian country like China could put the virtual currency at risk.

Another unexpected result shows the negative impact of Bitcoin on our environment. Cryptocurrency mining has consumed the same amount of electricity as a country like the Netherlands. While Cambridge University estimates that only 39% of mining is powered by renewable energy, and the rest uses fossil energy and emits large amounts of carbon emissions.

The shift from China to North America, where the question of Bitcoin's impact on the environment has become a priority, along with China's crackdown on mining in coal-intensive regions. can be paradoxical with the goal of making mining greener.

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