"Many miners are exiting the business to comply with
government policies," said Mike Huang, operator of a cryptocurrency mining
farm in the southwest province of Sichuan.
"Mining machines are selling like scrap metal."
The local government of Sichuan, China's No.2 Bitcoin mining
centre after Xinjiang, issued a ban on cryptocurrency mining a week ago.
Bitcoin price in India stood at Rs. 25.3 lakhs as of 1:45pm IST on June 25.
China's State Council, or cabinet, vowed to crack down on
Bitcoin trading and mining in late May, seeking to fend off financial risks
after the global Bitcoin mania revived Chinese speculative trading in
cryptocurrencies. The clampdown comes as China's central bank is testing its
own digital currency.
Chinese authorities say cryptocurrencies disrupt economic
order, and facilitate illegal asset transfers and money laundering. Analysts
say Beijing is also worried about potential competition for the digital yuan
and that the power-hungry business of bitcoin mining could damage the
environment.
Following Beijing's call, China's main cryptocurrency mining
hubs, including Inner Mongolia, Xinjiang, Yunnan, and Sichuan, have unveiled
detailed measures to root out the business.
Bitcoin prices plunged below $30,000 this week, less than
half their peak levels hit in April, as global investors worried about
disruptions in a hitherto large market.
"If the government doesn't allow it (cryptocurrency
mining), I just have to quit," said Liu Hongfei, a mining project operator
in China's southwestern Yunnan province.
"You don't fight the Communist Party in China, do
you?"
China's ban on Bitcoin mining may see up to 90 percent of
all mining in the country go offline, according to an estimate by Adam James, a
senior editor at OKEx Insights.
Bitcoin and other cryptocurrencies are created or
"mined" by high-powered computers, or rigs, competing to solve
complex mathematical puzzles in a process that makes intensive use of
electricity.
Most miners in China are "shutting down their machines,
and selling them," said Nishant Sharma, founder of BlocksBridge
Consulting, a consultancy focused on the cryptomining industry.
As a result of China's shutdown, "every mining
operation outside China benefits straight away," because their mining
reward, which is proportional to their share of the global hash rate of the
bitcoin network - a measure of miners' processing power - automatically goes
up, Sharma said.
"This is the end of an era for cryptomining in
China," said Winston Ma, NYU Law School adjunct professor.
Relocating
Prices of mining rigs have slumped on the mainland after the
ban.
One machine which sold around CNY 4,000 in April and May,
could now be bought for as low as CNY 700 - CNY 800, said a miner in Sichuan.
Bitmain, China's biggest maker of cryptocurrency mining
machines, said on Friday it had suspended sales of its products and was looking
for "quality" power supplies overseas alongside its clients, in
places including the United States, Canada, Australia, Russia, Kazakhstan, and
Indonesia.
Some big Chinese miners are already venturing overseas.
BIT Mining said on Monday that it had successfully delivered
its first batch of 320 mining machines to Kazakhstan. A second and third batch,
totalling 2,600 machines, will be delivered to the central Asian country by
July 1.
"We are accelerating our overseas development for
alternative high-quality mining resources," CEO Xianfeng Yang said in a
statement. BIT Mining has also invested in cryptocurrency mining data centres
in Texas.
Huang Dezhi, who operates a mining farm in Sichuan, said his
team is also exploring possible overseas destinations such as Kazakhstan.
"If the government doesn't reverse the policy, we will
have no other choice. You cannot defy central government decisions," Huang
said.
A project manager who identified himself only as Mr. Sun
said he has been offering to help local miners move to Russia, but demand for
his services had been lukewarm so far.
"Big risks if you move machines offshore, because
you're in effect giving up control over your assets," said Sun, who is
also securing fresh electricity supplies in China's southern Guangdong
province, where restrictions are less tough.
Some miners meanwhile hope the ban will be eventually
relaxed.
"Power supply has been cut, but we were not ordered to
demolish the project," said Wang Weifeng, a miner in Sichuan.
"So we're taking a wait-and-see attitude. There remains
a sliver of hope."
© Reuters
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