China’s Bitcoin miners are looking at US, Kazakhstan, Canada, and Europe amid the exodus — but not every option fits the bill
- The Chinese government called for a severe crackdown on
Bitcoinmining and trading, setting off a global phenomenon that's often dubbed ‘the great mining migration.’
- China contributed up to 65% of the Bitcoin hash rate, followed by the US, Russia, Kazakhstan, Malaysia, and Iran.
- Miners are actively looking for alternatives and heading west. More precisely, Texas, Florida, or even Canada.
- These regions are trying to woo mines with some of the world's cheapest electricity, a higher share of green energy, and pro-crypto lawmakers.
The movement is underway right now, and while it means the end of Bitcoin in China, it also means a new region will soon be the focal point of the crypto community. And, there’s no shortage of contenders trying to woo these miners over to their side.
Since decentralized finance means the cryptocurrency has no borders or a single regulating party, mining is also scattered. However, it is concentrated around regions that have a cheap source of electricity. Till now, China's Sichuan was a favourable destination thanks to abundant electricity via hydropower, but that's no longer a viable destination. So, where are the miners headed next?
Head West is the new mantra
Mining is the energy-intensive process that creates new coins and maintains a log of all existing digital tokens. The cumulative processing power of the network is called the hash rate. The higher the hash rate, the healthier the blockchain is. Hence, it's a perennial process that cannot afford hiccups at a massive scale.
China contributed up to 65% of the Bitcoin hash rate, followed by the US, Russia, Kazakhstan, Malaysia, and Iran. Amid the sudden crackdown, Bitcoin’s hash rate is down by almost 40% from its peak.
Miners are headed west to Texas and Florida — even Canada. Immediately after China's announcement in May, many big mining companies packed up and moved to the former wild west. Some of these names include Bitmain, Blockcap, Argo Blockchain, Great American Mining, Layer1, and Riot Blockchain.
The region makes for an attractive place to set up shop since it boasts of having some of the world's cheapest electricity, a higher share of green energy, and pro-crypto lawmakers. While China supplied the power, its politicians were never sold on the decentralised idea.
As noted by the former governor of Texas, Rick Perry, miners are a significant accelerant for job creation and sustainable economic growth. And, the current governor, Greg Abbott, has carried that trend forward and put up a huge welcome sign-board for miners.
AdvertisementFlorida is also wooing crypto miners by offering cheap electricity from its abundant nuclear power plants. “We want to make sure that our city has an opportunity to compete,” Francis Suarez, the Mayor of Miami, told CNBC. “We’re talking to a lot of companies and just telling them, ‘Hey, we want you to be here.’”
Similarly, Maryland has also managed to attract at least one mining company from China. A Chinese logistics firm, Fenghua International, confirmed that it will be flying 3,000 kilos worth of mining equipment from Guangzhou in China to the mid-Atlantic state.
Blockchain is a booming industry that Texas needs to be involved in.I just signed a law for Texas to create a mas… https://t.co/3w6btK8yC4— Greg Abbott (@GregAbbott_TX) 1622852603000
Limited options other than the USOther possible global destinations include countries like Kazakhstan, which is right next door to China. The nation's coal mines offer a low-cost, abundant energy supply, and the government has building-friendly policies which make it easy to construct offices quickly.
BIT Mining has already shifted 320 mining machines to the former Soviet republic and another 2,600 are expected to arrive soon.
While the logistics of moving from China to Kazakhstan are more straightforward, but the US offers political stability, wider reach, and has far better chances of pivoting to green energy.
Colder regions like Scandinavia, Russia, and Canada offer temperate or even polar temperatures, which aids in keeping the chips cool. While this helps reduce electricity consumption, it only eliminates cooling costs.
Canada, for instance, has high electricity costs. And, many other formerly popular options like Iceland, Norway, and Sweden have reached their limit in terms of generation capacity.
Iran has encouraged mining over the last few years but announced a surprise ban this summer. The country has issued an order to stop mining for a few months since it cannot meet the local energy demand. The government claims the energy requirements of miners have depleted the entire grid, causing frequent blackouts. While the country tries to figure out a middle-ground, the US has taken the lead.
Texas even has a brand new solution to offer — oil and gas vent capture technology. Pioneered by companies like Upstream Data, this technology captures escaping gas and turns it into energy.
Companies like Great American Mining are also helping oil producers cut their gas byproducts while drilling by converting the wasted gas into potential fuel.
The most significant concern surrounding the migration is Texas's capacity to handle the surge because the state's grid has historically struggled during extreme weather. During winter, blackouts were a norm in the state, and residents were left with no energy amid freezing temperatures.
While companies are making a move, it'll be interesting to see how local communities react to mining farms and their thirst for electricity.
For a more in-depth discussion, come on over to Business Insider Cryptosphere — a forum where users can deep dive into all things crypto, engage in interesting discussions and stay ahead of the curve.
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