In China, many crypto-asset mining companies have built factories because electricity prices are cheap. China, where cheap electricity is available from coal-fired or hydroelectric power, has long been a cluster of mining factories, and at one time, China accounted for 70% of crypto asset mining. However, in May 2021, when the Chinese government tightened regulations on crypto assets, the Chinese crypto asset industry was hit hard.
Some mining companies have been escaping from China even before the Chinese government’s regulations began in earnest, while others are being forced to flee China rapidly. Bit Digital, a mining company listed on the Nasdaq, is one of them, and it is said that it is trying to export more than 20,000 computers overseas due to stricter regulations on crypto assets in China.
Mining companies provide massive computing power to the blockchain to obtain newly issued crypto assets. Therefore, mining companies need to run high-performance computers in large quantities, but it is difficult to package these computers so that they are not damaged and ship them overseas. BitDigital CTO said that as of June 30, there are 9,484 computers remaining in Sacheon, and they plan to transport all computers to North America by the end of September through an international shipping company.
It’s also cheaper than buying a new computer, but it can cost millions of dollars to ship all the mining computers in China out of the country. In 2021, oil prices are rising, and the current level is in the upper 60s. Cargo transportation bottlenecks are also occurring due to the COVID-19 pandemic. And since computers sent from China to the US are subject to a 25% tariff, mining companies must bear all these costs.
The challenges that mining companies face are not only the transportation time and cost, but also where to open new mining plants. Originally, mining factories were built in China because the price of electricity is cheap, but if you move to a place with a new high price of electricity, profits will decrease. There is already an active movement by mining companies to build large-scale mining factories in areas where electricity prices are low in the United States.
The CEO of Las Vegas-based mining firm Marathon Digital Holdings (MDH) said it would be a huge financial blow for Chinese miners. also explained
China has been taking a strict stance on crypto assets from the past, but many mining companies are aware of this risk and have developed Chinese mining factories for low prices. A company official who has maintained a mining farm in China for a long time said that the concern was always on his mind, but it was not as urgent as it is now.
As mining companies are rapidly moving out of China, demand from companies such as Compute North, which provides the necessary infrastructure for crypto asset mining factories, is increasing. As mentioned earlier, BitDigital, which intends to move 20,000 computers to North America, is also said to be operating a new mining plant in partnership with Computer North. Compute North already offers mining facilities in Texas, South Dakota and Nebraska, but plans to open five new facilities in response to growing demand. There are also companies in China that are responsible for cleaning, inspecting, and packing equipment before transporting mining computers abroad.
According to the report, crypto asset proponents are also saying that if a mining plant moves outside of China, some say that they are also welcoming the decentralization of Bitcoin by proceeding with decentralization of bases that provide computing power to the block chain. In China, there are also reports that the Shandong High Court has officially stated that crypto assets are not legally protected in a trial appealed by a man whose money invested in crypto assets cannot be recovered due to a government decision. Related information can be found here.