Bitcoin and Ethereum prices are in free fall as China plans to put pressure on…
According to Jiang Zhuoer, CEO of mining pool BTC, relocations of Bitcoin (BTC) miners inside China are already underway – and if the situation worsens, they could be moving out of the country in droves. However, this will lead to hashrate decentralization.
Jiang told Cryptonews.com that the majority of miners in China were operating as usual until recently, despite government crackdown on BTC mining and trading. On June 9, new policies ordering the closure of mines are reportedly implemented in Xinjiang and Qinghai. More importantly, Xinjiang is one of the major mining centers not only in China but also in the world.
In the spring of 2020, China had an average monthly share of 65% of the global hashrate, or computing power, of the Bitcoin network and was already declining at that time, according to the latest available data provided by the Cambridge Center for Alternative Finance. Only Xinjiang had an income of almost 36% and sichuan 10%.
Two key points per jiang influenced the government's decisions to shut down miners in this large region: one is due to ongoing financial stability concerns, and the other is that Xinjiang's power is mainly generated by coal or a thermal power plant that does not meet the national carbon neutral goal.
Therefore, according to Jiang, “ Most of the miners working in Xinjiang now need to relocate, the relocation is currently ongoing. “
BTC. TOP estimates that there is an 80% chance that many facilities in Xinjiang will eventually be shut down.
The good news for miners comes with the arrival of the rainy season as there is an abundance of resources in Sichuan, in fact, “ there will be enough resources to house most of the miners ,” Jiang said.
The wet season lasts for several months and gives BTC. Best time to “see how things go”.
Bitcoin mining “Worst case scenario”
Worst case scenario, mining is banned in both Xinjiang and Sichuan. If that happens, BTC. TOP will consider shipping and relocating most of its machines outside of the country, specifically to Canada and the USA.
“ These two countries have a well-developed infrastructure and […] their regulations are very stable and predictable. " said.
BTC after North America region. TOP will consider Central Asian countries as it is easy to move there due to its proximity to Xinjiang.
As reported, another Chinese mining firm, BIT Mining, has partnered with an unnamed Kazakhstan-based company. The two will jointly invest in a crypto mining center to be built on Kazakh territory, where Bit Mining will cover 80% of the expenses.
Meanwhile, according to Jian, the Middle East is no longer an option. BTC. TOP tried to cooperate with some mining facilities there, but it "did not go well", so the conclusion was that this area was not safe for their business. Jiang noted that his local partners took over their machines “after the machines went overseas, mainly due to a lack of control in some high-risk countries.”
On the other side of the coin, if miners move, they will be scattered around the world, which will lead to hashpower decentralization. Large plants in China will disappear: some will be moved to other countries, and other parts will be divided into smaller sections, and some will turn into mining from home.
The second effect of such a ban would be on machine prices. Small miners would most likely not be able to relocate to other countries and would have to sell their machines. Therefore, machine prices will drop by 14%-15% for two reasons: 1. many miners selling their machines; 2. The BTC price is going down as the machine price is tied to the price of the crypto.
The worst-case scenario – as well as the scenario we are seeing right now – will be largely the result of the Chinese government's hatred of financial derivatives and volatile cryptocurrency products. “The Chinese government does not like speculation and wants the financial sector to serve the real economy. ” he added.
For crypto in particular, the government has taken a hostile stance due to financial stability concerns, volatility, and crypto-related scams. However, BTC. TOP predicts that crypto mining will not be banned at the national level.
And if that is indeed the case and there is no nationwide mining ban, BTC. TOP has no plans to move abroad. According to Jiang, China is the best place for crypto mining, “ because we have a stable policy infrastructure and manpower is cheaper. “
Unless the policy towards miners changes and solidifies, BTC. TOP will keep the current size and not seek to grow or buy more machines, jiang said. The CEO also concluded that “we may not be able to buy new machines”.
Meanwhile, more details have emerged as China's Yunnan Province's latest crypto mining crackdown measures are starting to take shape. Yunnan wants to shut down all commercial-scale miners operating in the province before the end of the month, according to media outlet China Coal News. Anonymous Yunnan energy regulators have stated that after similar moves in Qinghai Province and Inner Mongolia Autonomous Region, various energy providers will conduct "joint inspections" to stigmatize industrial mining, the media outlet said.
