China could lose in the coming years the power it holds in the mining of Bitcoin (BTC) and cryptocurrencies. Stricter government regulations, increased inspections by the authorities, lower production capacity of equipment manufacturers and the “institutionalization” of the industry, would be putting pressure on the miners.
The foregoing stems from a recent report that also cites that the internal migration of miners in China, due to the rainy seasons, is not sustainable over time. The countries that could capitalize on the possible exit of the miners would be: Russia, the United States, Iran and Kazakhstan.
“I always wondered how China is mining about 65% of all BTC today and not Russia. I am really interested in trying business in Russia. We are planning to come after the pandemic to see the prospects for mining. In fact, many Chinese companies do, ”an unidentified Chinese miner told CoinTelegraph.
China concentrates between 65% and 70% of bitcoin mining activity worldwide, according to reports. Source: photocreo / elements.envato.com
The situation in China would have influenced the closure of mining farms in regions such as Inner Mongolia, Sichuan and in Yunnan province. The panorama would be pushing miners to rethink moving their operations, even if it means leaving the country.
A reconfiguration of mining activity in the world is not an easy thing, especially under the conditions that are being considered in the countries that would receive miners from China.
The main obstacle in the case of Russia is that the national government is designing its legislation on cryptocurrencies and bitcoin mining. Regarding the latter, it has been reported that there are potential reforms in which miners would be prohibited from directly receiving incentives for the activity they carry out. In other words, it would be the government that distributes the rewards.
In the case of the United States, the outlook is no less friendly. The current political instability and regulations against China could be more important than getting cheap electricity when it comes to migrating operations.
Despite the foregoing, Barry Silbert, founder of Grayscale Investments, declared in February this year that since the latter part of 2019 he had observed a “growing change that has been moving much of this mining activity out of China, specifically to the US. USA and Canada ”. However, Silbert did not explain why the transfer was taking place.
As for Iran, CriptoNoticias reported in April 2019 that the Persian country was becoming an alternative for miners from China, despite the restrictions it maintains on the activity. The main reason is the low cost of electric power.
The problem is that the government has hardened its position regarding bitcoin mining. In fact, a new law under discussion would force miners to sell their BTC to the central bank to finance imports.
The fact that China loses a percentage of bitcoin mining could happen, but given the current conditions it would not be in the short or medium term. It must be remembered that the main manufacturers of mining equipment such as Bitmain, Ebang or Innosilicon, for example, have their headquarters in China.