Sichuan Bitcoin mining machines are all shut down, and domestic miners are bound to go overseas

Source: CoinKaola

Original title: Sichuan Bitcoin mining machines are all shut down, and domestic miners are bound to go overseas

Introduction: Bitcoin computing power and the infrastructure built around it have accelerated their transfer overseas, and the process of de-Sinicization of Bitcoin computing power has already begun.

On June 18, 2021, relevant departments of Sichuan Province officially issued a notice requiring power generation companies to conduct self-inspection and self-correction, immediately stop supplying power to virtual currency "mining" projects, and implement national cleanup requirements.

On June 19, the shutdown came as expected, and with it came a continued decline in the total Bitcoin hashrate. As of 15:00 on June 21, BTC data showed that the total Bitcoin hashrate was 118.26 EH/s, down more than 30% from the historical peak of 181 EH/s on May 13 this year.

It can be predicted that under the crackdown by local governments, the number of Bitcoin mines and miners in China will continue to shrink, and its share of global computing power will continue to decline; this may also mean that the era of China's Bitcoin mining industry has come to an end, and overseas Bitcoin mining industries such as North America will begin to rise.

As for the issue of mining going overseas, Bitmain, a leading mining machine manufacturer, held a closed-door invitation meeting in Chengdu on June 19 with the theme of "mining going overseas", aiming to provide convenient conditions for domestic miners and mine owners to go overseas. As far as the current situation is concerned, going overseas has become a trend.

List of overseas mining layout

According to Koala Finance, the leading mining companies are basically expanding overseas. Currently, the locations of large miners and mines are mainly the United States, Kazakhstan, Canada, and Russia.

USA:

Crescent Power Supply Company has compiled statistics on the cost of Bitcoin mining in various states in the United States. The top five states with the lowest cost of mining BTC are: Louisiana (the cost of mining one Bitcoin is $3,224), Idaho, Washington, Tennessee, and Arkansas. The five most expensive states are: Hawaii (the cost of mining one Bitcoin is $9,483), Alaska, Connecticut, Massachusetts, and New Hampshire.

Kazakhstan:

China and Kazakhstan are friendly neighbors and are close to Xinjiang, making them the first choice for many large mining factories. However, Kazakhstan's policies are also changing. Kazakhstan only allows the mining of cryptocurrencies backed by assets; it prohibits the mining of "unsafe" cryptocurrencies such as Bitcoin.

Canada:

Canada encourages and supports innovation in the field of cryptocurrency, mainly because its economic size and financial market size are much smaller than those of the United States. Therefore, as an immigrant country, Canada has a lower cost of trial and error. In addition, Canada is at a higher latitude and has more land within the Arctic Circle than the United States. Therefore, it has attracted many Chinese mines to "go global" as early as 2018. Currently, Quebec, Manitoba, British Columbia, and Alberta, which are rich in hydropower resources, have attracted much attention.

Russia:

Low energy costs make Russia the next battleground. Although Russia prohibits the use of cryptocurrencies to purchase goods and services, it will allow cryptocurrency mining and trading from 2021, and even the military has joined the mining team. Currently, Irkutsk Oblast, Leningrad Oblast, and Krasnoyarsk Territory are the most popular places for miners.

Safety and stability are the primary considerations for mining overseas

Jiang Zhuoer, CEO of BTC.TOP, once said, "Chinese miners going overseas prefer developed countries such as North America, where the political environment and regulation are relatively more friendly, such as the United States and Canada. Kazakhstan is the most popular destination for miners in Central Asia. As for the Middle East and Russia, most miners probably won't choose them at the moment. There have been cases where miners had their mining machines confiscated after mining for a period of time in the local area due to various inspections and bans. The first thing to consider when going overseas is definitely the safety of the machines."

In addition, Jiang Zhuoer also described the possible situation of the domestic mining industry after strict supervision: some mining machines will be consumed by domestic small and medium-sized miners and family miners, and those that cannot be mined domestically will be transferred overseas; and some orders for existing mining machine manufacturers, such as the S19 new mining machine, will also be mainly sold abroad. Selling domestically is to resist supervision, and selling abroad is to export and earn foreign exchange. Everyone should know which choice to make. "

A well-known mining manager also expressed his views to Koala Finance: "Before, when mining machines went overseas, mining machine manufacturers mostly shipped them to North America. Now many of the United States uses clean energy, and the cost is not high. However, developed countries will definitely encounter management and taxation issues in the future, and the expansion of mining scale may not be as good as China; Northern Europe was also possible before, but the power load there has been insufficient since this year. The business environment in some developing countries in Central Asia, such as Kazakhstan, is not stable enough, and the interests of Chinese people in the local area are difficult to be guaranteed. For companies or miners who really decide to go overseas, safety must be the first priority. If the interests are not guaranteed due to a change in local policies, then there is no point in going abroad."

What factors still need to be considered when going overseas?

In addition to safety issues, there are still factors that need to be considered when going out to sea, which can be roughly divided into two aspects:

1) Policy factors

The first is the price of electricity. This is the main cost, and the lower the price, the more attractive it is to miners.

The second is temperature. In areas with low temperatures, there is no need to build a separate cooling device. In urban mining, the huge heat generated must be considered.

The third is the network. The faster the network speed, the faster the entire mining process will be uploaded to the chain.

Currently, regions that possess these three advantages include Russia, Canada, and Nordic countries such as Iceland.

2) Non-policy factors

The first is financial and foreign trade policies. Will cryptocurrencies be supported, or mining allowed? Will mining machines be suddenly confiscated? If there is a natural disaster, will power losses be subsidized? Are there any new tax incentives? Are there any preferential or discriminatory policies for Chinese companies?

The second is energy and environmental protection policies. How to commit to emission reduction internationally? What is the current carbon emission situation? Is there enough clean energy to replace it? If the environmental protection problem in the country is more prominent, on the one hand, high-energy consumption activities must be restricted to appease the world, and on the other hand, it is necessary to purchase carbon emission rights at a high cost. If the income is not enough to cover the expenditure, the cryptocurrency mine will inevitably become the target of public criticism.

In any case, looking back, Bitcoin computing power and the infrastructure built around it have accelerated their transfer overseas, and the process of de-Sinicization of Bitcoin computing power has already begun.