China is home to more than half of the world’s crypto miners, but Beijing wants them out as quickly as possible. In May, the Chinese government declared a ban on Bitcoin mining and trading, prompting what has been dubbed “the great mining migration” in cryptocurrency circles. This movement is already taking place, and it can substantially change Texas.
Despite a reserve deficit that caused in days-long outages last winter, Texas has some of the least energy rates in the world, and the proportion of its renewable is rising with time, with wind energy providing for 20% of the state’s power in 2019. It has a deregulated power infrastructure that enables users to choose between electricity suppliers, and its politicians are staunchly pro-crypto, making it an excellent location for a miner looking for a positive response and cheap energy supplies.
The next three months will show a dramatic shift, according to Brandon Arvanaghi, a former Gemini Security Engineer. Mining is being supported by governors such as Greg Abbott in Texas, and it is on its way to becoming a legitimate industry in the United States, which is terrific.
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China’s Mining Dominance
Although figures on the global distribution of mining power for 2021 are not yet accessible, earlier estimates show that China contributed 65 to 75 per cent of global bitcoin mining, with Xinjiang, Inner Mongolia, Sichuan, and Yunnan making up the majority of it. Because of its hydropower, Sichuan and Yunnan are renewable energy powerhouses, but Xinjiang and Inner Mongolia are hosts to many of China’s coal plants.
Inner Mongolia has already begun to cut the number of miners employed within the country. After failing to meet Beijing’s environmental goals, local officials decided to give bitcoin miners two months to depart, condemning the cryptocurrency business for the province’s energy shortages.
Nic Carter, the founding partner of Castle Island Ventures, believes that while it is uncertain how China would handle the next phases, a phased rollout is likely. He went on to say that it looks that we are going very fast from policy statement to actual execution.
Where They’re Going
Although China’s declaration has yet to be implemented, miners are minimizing their losses and leaving the country.
Mining pool in Hong Kong Poolin Vice President Alejandro De La Torre remarked that they do not want to encounter new restrictions in China every year. As a result, they are seeking to broaden their global mining hashrate, which is why they are travelling to the United States and Canada.
One of the most attractive characteristics of Bitcoin is that it is location neutral. Miners just require internet access, in contrast to other industries, which require them to be physically close to their clients.
The migration, however, will be gradual, in part because miners will need time to relocate their equipment out of China or liquidate their assets and establish new businesses abroad.
Because they participate in a low-margin industry with the sole variable cost being electricity, miners at scale are motivated to migrate to the least expensive power sources.
Kazakhstan, China’s neighbor, is one potential destination. Coal mines in the nation provide a cheap and abundant source of power. It also helps that Kazakhstan has a more laidback attitude toward construction, which is great news for miners who need to establish physical facilities quickly.
However, because Kazakhstan’s mining sector has only been in service for two years, the country’s electricity supply can only support a limited number of Chinese miners. It is yet to be seen if Kazakhstan is a destination in its own right or only a stopover on a longer travel west.
Texas is another favorite destination for miners. According to an industry insider who spoke on the declined to be identified to the Global Times, Texas is a popular location for Chinese Bitcoin miners since the US government has a defined policy and legal framework for cryptocurrencies. They went on to say that the cost of power in the state is relatively low.
Hi! I’m Bryan, and I’m a passionate & expert writer with more than five years of experience. I have written about various topics such as product descriptions, travel, cryptocurrencies, and online gaming in my writing journey. The latter is one of my favorites topics, and you can find some of my premium casino content at OUSC.
