Aside from considering relocating overseas with their operations or quitting the sector entirely, some Chinese crypto miners are likely to remain in China as they contemplate investing in green energy to reduce their carbon emissions, a state-owned media has reported.
The CGTN report states that a section of miners are keen on investing in hydropower, solar and wind farms to ensure a stable power supply even though others insist on migrating to countries in Central Asia like Kyrgyzstan.
Discussions around miners’ exodus was triggered by recent Beijing’s renewed call for a crackdown on Bitcoin mining which has seen several mining operations shut down in some Chinese provinces. The buzz about relocating saw the small South American country of El Salvador, after becoming the first country to formally adopt Bitcoin as legal tender, disclosed it is developing a plan to offer Bitcoin mining facilities from the country’s volcanoes. The move somewhat signalled El Salvador’s readiness to offer cheap, clean and renewable energy supposedly to entice miners.
Elsewhere, there have been indications that China’s mining power – estimated to be between 65% and 75% of global distribution and mostly from four provinces: Xinjiang, Inner Mongolia, Sichuan and Yunnan – are now headed to Texas in the U.S.
Going by a drop in hashrate as recorded in May, Castle Island Ventures founding partner, Nic Carter, told CNBC that it appears likely that installations are being turned off throughout China. He also thinks that about half the Bitcoin hashrate will leave China eventually. “Every Western mining host I know has had their phones ringing off the hook,” Carter said. “Chinese miners or miners that were domiciled in China are looking to Central Asia, Eastern Europe, the U.S. and Northern Europe.”
However, the look out may not lead to miners moving out eventually, suggests the CGTN report in addition to the decision by some miners to go green.
“I think, generally speaking, people are seeing the writing on the wall and if you are not attempting to go green, you are increasingly uninvestable,” says Alex Brammer, vice president, business development of Luxor & Hashrate Index, U.S., to CGTN. He adds: “Bitcoin being able to capture otherwise completely stranded energy in locations where it would not have otherwise been accessed or tapped into, is going to give Bitcoin miners a financial edge because they are going to get some of the cheapest power in the world in the states where they’ll otherwise never be extracted.”
For Arthur Lee, CEO of SAI, a bitcoin and computing company, a lot of miners will stay in China because of provinces like Sichuan and Yunnan which have a problem of stranded clean energy. He said these provinces would have to sell to Bitcoin miners to increase their profit and avoid waste.
There is also an argument that the migration of miners is not good for China and should be resolved. That’s according to Liu Changyong, professor at Blockchain Economic Research Institute at Chongqing Technology and Business University, who told CGTN that Bitcoin mining generated huge tax revenue and created job opportunities to help China’s fight against poverty.
“There is a risk of losing a sector that was nurtured from 2013 to 2017. Policymakers, power companies and bitcoin miners should come together to resolve the issue,” he said, adding that such steps would be a “win-win deal for everyone.”