China, which until a few months ago accounted for more than half of global Bitcoin production, banned payment companies and other financial institutions from offering services related to cryptocurrency transactions in May 2021. which has been a major crackdown on crypto assets. As a result of this massive containment, many major cryptocurrency mining companies are moving out of the country with their systems, including computers which are the most crucial part of the mining process. Cheap electricity in China made it beneficial for many companies to conduct cryptocurrency operations on a large scale.
The expensive cryptocurrency mining machines are prone to damage if shaken. It can cost up to $12,000 (about Rs. 8.76 lakhs) per system. And the companies now have to calculate the transportation costs and decide whether to ship these machines by air or by sea, according to a report from The Wall Street Journal. Bit Digital, a Nasdaq-listed company, has reportedly moved more than 20,000 computers out of China.
Samir V. Tabar, Bit Digital’s chief strategy officer, was quoted in the report as saying that Bit Digital had hired major international logistics companies to help them move their machines. He hopes to get the computers in North America by the end of September.
Fred Thiel, Chief Executive Officer at Marathon Digital Holdings, a Las Vegas-based cryptocurrency mining company, was quoted by the US newspaper as saying that the Chinese crackdown has had quite a significant financial impact on the miners operating from there. “It’s like GM has to close a factory and build a new one somewhere else,” he reportedly said.
Cheap electricity, especially in Inner Mongolia and Xinjiang, as well as Sichuan and Yunnan in China, despite its long standing position against speculative crypto trading, made these favorite destinations for mining companies. Interestingly, Bit Digital, anticipating a fight, is said to have started moving its systems out of China itself in 2020, but many others were caught off guard.
Alejandro De La Torre, vice president of Poolin, a cryptocurrency mining pool operating in China, reportedly said that mining crackdowns were always in the back of their minds, but never an urgent issue until the country launched it. According to the report, the exodus of mining companies from China has been referred to by many as the “great mining migration”.