Topic: [2018-01-12] China’s Bitcoin Miners Begin Exodus amid Government Crackdown (Read 205 times)

This is obviously right. However, I don´t think that it will deter the big Chinese
mining companies like Bitmain from setting up shop in different jurisdictions
like Switzerland or Canada. The mining business is far too profitable to just quit
after a few setbacks courtesy of the Chinese government.

Besides, the people behind the big mining companies have amassed massive
fortunes and therefore also have the capital that is necessary to work out
all the technical and legal details. Actually I think that this might be beneficial
for the Bitcoin network as a whole, because it will break up the current centralization
of the biggest miners in China.

there are two separate issues. one is geographic concentration. an exodus of hash power away from china is a positive development. people have been worried for years about the chinese government's ability to drastically affect the hash rate with government action. this alleviates that concern. the GFW has also been a concern with regard to block propagation delays with bigger blocks (since the majority of hash rate is within the GFW), so there's another potential benefit.

the other issue is majority hash rate concentration among only a few ASIC manufacturers and pool operators. bitmain has already been setting up outside of china for years. they back multiple pools in different localities. they have mining facilities all over the world. they have mining facilities in canada and are apparently buying more. i've seen reports they are looking into swiss facilities as well.

i'm hoping that this problems is mitigated by new ASIC manufacturers entering the marketplace. GMO and dragonmint come to mind, but i'll believe it when i see production units and market share being taken from bitmain!

the Chinese government does not want decentralized things and for that they are not worried whether or not they will suffer losses by sending the miners away, as long as they have control over their people and there is nothing decentralized in their country, that is okay.


this is the good part of this situation, to have many miners scattered around the world and not to have a concentrated power in only a group of people located in the same region

I'm curious if this exodus will actually decrease mining centralization or not. There's a popular belief that somewhere between 70% and 80% of mining power concentrated in hands of just a few pool owners, and that Bitmain can leverage their monopolistic position influence the miners, so even if Chinese miners will scatter across the globe, they still might depend on Bitmain and pools. But if these centralization fears are overblown, this exodus might be a good thing, because we will be sure that a single government can't seize enough equipment to get majority of Bitcoin's hashpower, unless majority of Chinese miners will move to a single country.

The Chinese government is increasingly narrowing the bitcoin miner if it continues then, they have to find a new country they can use to do the mines, they have to move to the country with cheap electricity costs and of course the mining there is not prohibited. For example in japan, swish, south korea, finland and others.

China is far too subtile with their smoke screen attempts to get rid of miners. Just give them a date they will have to exit China, and they will do so. I applaud these actions, because this will make China less of an important factor in this industry, and thus contribute to less hash power pooling in one central location. While it may not look like so at this point in time, the Chinese government is actually contributing to less country based centralization in the mining industry. It will make Bitcoin less of a target for whatever bad intended government.

Moving out would mean hiring additional staff elsewhere. Those mining operations aren't manned by a lot of people. Sometimes it's just 2 guys running maintenance for a huge farm the size of a football field. They live and work there having beds and everything set up on site. Also there's the matter of security. You know your local area, moving to another country and setting up there is always more risky.


That's the beauty of capitalism and internet-based companies. You can run them from anywhere in the world and banning something in one country only means that another one will earn more. When the miners leave China will have an abundance of power that nobody will be using and much less money from taxes. The problem with power plants is that they're the most efficient when they're going at 100%. They will be producing all this power that used to be drawn by the miners anyway but nobody will pay for it. It will just go to waste. The Chinese gov is so stupid.

I think they're making a critical mistake by pulling this off, they already pulled of something similar back in september and that only caused a temporary price decrease. If China wants to get rid of all the bitcoin miners and mining companies in China they will move elsewhere it's that simple.

This has to be expected, those greedy Chinese should have smell it from afar that the government is really clamping everything that has bitcoin sign all over it. One thing that I'm seeing is that if they are really banning it, the price will be severely affected, just like when they banned ICO and closes their local trading platform. But closing mining farm is different, it will really disrupt the economics of bitcoin. However, there are also news that Japan will get their hands on mining as well. So at least we have another country that will enter the picture. Lately there's news that Bitcoin is looking at Quebec and Switzerland to be their new mining farm. So it ever there's a effect, it should not last long and we may see that bitcoin can slowly recover again.

I see that Quebec Canada was making a push for miners to come there to use up their surplus energy capacity and that small town in Washington State U.S.A is growing by leaps and bounds due to cheap energy, stable internet.

I was expecting this to happen.The Chinese government won`t allow the big miners in China to waste the cheap electricity for mining operations anymore.The bitcoin devs will have to make mining more energy efficient,or bitcoin and the other cryptocurrencies will face a major crash.The crypto mining future belongs to countries like Ethiopia and Kongo.They have lots of water resources that are suitable for producing cheap electricity.

It's a strange thing, that they didn't try to diversify their buisness before. The were not much law regulation of crypto related activity all around the globe. Without them it's always risky to base a company in one country.

Some news reports have started to emerge indicating that China may discourage bitcoin mining operations in the country by curbing their access to electricity. The move, however, may not affect all miners as the People’s Bank of China has only laid down a plan affecting a small subset of all mining companies in a meeting held on January 3, 2018. Part of the plan also involves keeping track of the electricity consumed by such large-scale operations and debating whether they are unfairly affecting power prices in the areas around them. An official in the Xinjiang province told the Wall Street Journal that the Chinese government had sent notices to local agencies and that he would be doing “what the country wants.”

In anticipation of such a restrictive policy being introduced, industry leaders with expansive mining operations have already been looking at other options overseas. Jiang Zhuoer, the founder of China’s third largest bitcoin mining pool, BTC.TOP, revealed in an interview with Bloomberg that the company  “chose Canada because of the relatively cheap cost, and the stability of the country and policies”.

According to Wu Jihan, CEO of the Chinese company Bitmain , his company is responsible for the production of around 70 percent of all bitcoin mining rigs currently in use. Bitmain also runs two of China’s largest bitcoin mining pools and is currently moving its regional headquarters to Singapore. It has also managed to set up its operations in the United States and Canada. Based off a report from the Swiss newspaper Handelszeitung, Bitmain has also established a subsidiary in Switzerland, which a company spokesperson said was chosen because it is “one of the most progressive countries…with good legal stability”. Likewise, ViaBTC, the fourth largest pool is also eliminating its dependence on China by starting its mining operations in North America and Iceland.

Philip Gradwell, chief economist at Chinalysis Inc, a blockchain analysis firm, stated in an interview with the Wall Street Journal:

“If China really does switch off all the minters suddenly, there could be a very high level of disruption. It’s very hard to estimate back-of-the-envelope how big an impact would be.”

He also believes that bitcoin could be in trouble, at least for a few weeks, before the network would be able to readjust the rate of mining new coins.

Arthur Hayes, CEO of the Chinese cryptocurrency exchange BitMEX, said:

“I don’t think miners have been sitting on their hands. Some people have already moved their hardware out of China.”

China, being an industrial nation, offers enterprises inexpensive electricity among other utilities. This is an especially important consideration since Digiconomist estimates that the annual power consumption due to bitcoin mining is a staggering 37.8 TWh, surpassing the total consumption of several nations, or 3.5 million average US households. Mining activities are, therefore, only profitable in the event that the electricity available to the parent companies is heavily subsidized. China can offer such discounts on energy prices due to its massive investment in coal and hydropower.

Studies have repeatedly shown that Chinese bitcoin miners account for a rather large percentage of the total bitcoin mining efforts worldwide. In fact, as much as 71 percent of all bitcoin mining pools are based in the country, at least as of mid 2017. The Chinese government’s crackdown on Initial Coin Offerings (ICOs) and cryptocurrency exchanges in September, 2017 may have deterred some of them, but the country is still home to a lion’s share of the mining efforts.

The ASIC (Application Specific Integrated Circuit) hardware used to mine bitcoin and other similar proof-of-work based cryptocurrencies are also almost exclusively manufactured in China, making it readily accessible for mining businesses in bulk quantities. As a whole, the Chinese have a relatively large monopoly over the cryptocurrency mining ecosystem, both in terms of market share and manufacturing.

China’s move to ban bitcoin miners, even selectively so, is likely in response to recent reports indicating the scale and extent of power consumption due to bitcoin mining. As the cryptocurrency ecosystem grows and bitcoin’s usage progressively increases as it has for several years now, the electricity usage is only expected to continue rising with time.

https://www.ccn.com/cryptocurrency-miners-may-move-out-of-china-following-government-crackdown/