Berita 24 English - Beijing's crackdown is hastening a shift in the focus of manufacturers of machines that mine cryptocurrencies such ...
Berita 24 English - Beijing's crackdown is hastening a shift in the focus of manufacturers of machines that mine cryptocurrencies such as bitcoin away from China and toward North America and Central Asia, as Chinese clients face an uncertain future.
China's central government pledged on Friday to crack down on bitcoin mining and trading, forcing some miners to suspend operations entirely or in part in a country that produces more than half of the world's cryptocurrency supply.
The manufacturers of the equipment used by miners, the majority of whom are Chinese, have stated that they are now looking for growth opportunities elsewhere.
Ebang International, based in Hangzhou, stated that even if domestic sales cease, "mining machines will remain in short supply" overseas.
The impact will be mitigated further by the fact that "domestic customers will travel abroad to mine," the company added in a statement to Reuters.
As an example of the trend, Shenzhen-based BIT Mining Ltd announced that it had entered into a joint venture with a Kazakhstan-based company to invest in a crypto mining data centre in the central Asian country.
Bitcoin miners use increasingly powerful, custom-built computer equipment dubbed "rigs" to verify bitcoin transactions, a process that results in the creation of new bitcoins.
China is a major player in the energy-hungry business, though the country's market share has been declining for years due to regulatory uncertainty.
Foreign miners will benefit if China rapidly loses its crypto computing power, according to Alex Ao, vice president of Innosilicon Technology, a chip designer and manufacturer of crypto mining rigs.
"North America and Central Asia have advantages in terms of power supply and policy support," Ao explained, adding that more Chinese miners will relocate overseas.
According to Edward Lu, senior vice president, Canaan Inc, another Chinese manufacturer of mining machines, said it was exploring similar markets.
"The strategy should be to aggressively develop markets such as Kazakhstan, Canada, and North Europe, where energy resources are plentiful and affordable, and regulations are transparent and predictable," Lu told Reuters.
'HOSTING HOSPITALITY'
Although China's northern region of Inner Mongolia, a major mining hub, published draft rules on Tuesday to eradicate the business, other major mining hubs have yet to follow suit following a salvo from a State Council committee led by Chinese Vice Premier Liu He last week.
"Moving their mining operations overseas is the miners' only option," Winston Ma, an adjunct professor at NYU Law School, explained, adding that only China's largest mining companies can conduct the exodus smoothly.
Last year, Kazakhstan, which clarified its crypto mining regulations, hopes the move will help boost the country's oil-dependent economy.
"On Monday, we received inquiries about our hosting services from three Chinese bitcoin miners," said Didar Bekbauov, co-founder of Kazakhstan-based Hive Mining, which provides 'hosting hotels' for mining machines.
Bekbauov stated that it appeared as though they were seeking an alternative following the crackdown.
Some miners are enraged at being forced to relocate.
"As long as mining is not illegal, you should not be able to kill the industry with a few words from officials," one Chinese cryptocurrency player, who requested anonymity, said.
