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Crypto miners have to look for new locations after their banishment from China
Photo: © Stephen Lam / Reuters / REUTERS
Relocation of the mining community: After the Chinese communist government banned them from the country, a number of crypto miners have to find new locations for their supercomputers. Beijing wants to enforce its own digital yuan: With the help of its own crypto currency, the state could trace the Chinese people's transactions in detail. That is why they no longer wanted to support the unpleasant Bitcoin currency, which is based on an anonymized and decentralized blockchain, through server farms in their own country.
A ban with consequences: the global hash rate, the computing power of the Bitcoin network, temporarily fell by 40 percent after Beijing's intervention.
The demand for new locations to mine Bitcoin was then greater than ever.
Some mining companies had planned ahead, others caught the move off guard.
They all have to move their computers out of the country now.
The only question is: where to go?
According to the industry online magazine Coindesk, a quarter of the performance in the USA should go online again.
Another 25 percent are likely to rebound in Central Asia, particularly Kazakhstan and Mongolia.
The third quarter is likely to be shared by South America and the EU.
The rest of the previous global computing power could be lost, according to Coindesk, because some of the computers were left behind in China.
Shorter distances and lower electricity prices in Kazakhstan and Mongolia
After their banishment from China, the mining companies are drawn across the border.
The neighboring states of Mongolia and Kazakhstan have some attractive properties for prospectors: first and foremost, the low electricity prices.
Because they largely determine the company's margins.
Arithmetic operations that are used to generate Bitcoin are particularly energy-intensive.
According to the Cambridge Center for Alternative Finance (CCAF), Bitcoin uses the same amount of energy per year as Sweden.
The average price per kilowatt hour in Kazakhstan is around $ 0.04 - a tempting price for the miners.
The cold, dry climate in the region is also ideal.
Too hot and humid conditions damage the supercomputers and their performance.
The proximity to China also makes the Central Asian countries interesting.
Because the miners want to open up new locations as quickly as possible.
Moving machines from China to Kazakhstan takes less time than getting them to the United States.
Then there are the high freight costs.
The computers, which are worth several thousand dollars, are also extremely fragile.
The labor that builds and maintains these is significantly cheaper in Mongolia than in the United States.
USA beckons for sure
In view of the costs, there is a lot to be said for a quick move within Asia. Nevertheless, some states in the USA are also vying for Bitcoin miners: because these have become an economic factor that should not be underestimated. Many companies are trading Texas in particular as a potential new location. The state, known for its oil industry, only legally recognized digital currencies in June. The Texas governor tweeted: "Blockchain is a booming industry in Texas. I just signed a bill to enable a master plan for the blockchain industry in Texas."
The Texas power grid is also decoupled from the US grid. Mining companies can buy capacities from electricity providers at a fixed price. When energy demand in the state increases in the hot summer months, especially for air conditioning, the farms can sell their electricity back to the grid - if they don't need it themselves. In the south of the USA, besides Texas, other states are vying for the crypto companies. In Kentucky, miners are already paying less taxes. In Floria, the Mayor of Miami, Francis Suarez, toyed with the idea of developing the city into a "hub" for Bitcoin mining.
Moving to the USA is time-consuming and expensive for miners, but the US states offer other advantages.
And they offer what China did not offer: stable legal business conditions, the American "business-friendly" attitude as well as possible benefits and subsidies from politics.
Venezuela: bankrupt country wants to become Bitcoin gold mine
According to Coindesk, the miners should also target Venezuela of all places. The country, plagued by crises and hyperinflation, attracts crypto companies primarily with its very low electricity prices. On the one hand, the Venezuelan bolivar is extremely weak against the US dollar. On the other hand, Venezuela sits on huge oil and gas reserves and has a strong hydropower infrastructure. Nevertheless, the country's residents suffer from blackouts that lasted several days. The two countries El Salvador and Paraguay are also trying to attract the mining industry. El Salvador recently attracted attention by allowing Bitcoin to be officially legal tender.
In Paraguay, too, electricity costs are very low at around $ 0.05 per kilowatt hour.
In addition, a large part of it comes from renewable energies.
The South American option carries a risk for the miners who are looking for it: the political and economic instability that prevails in many countries.
In any case, the first companies seem to have already found a location.
The average 7-day hash rate has bounced back from its low in early July and is around the same level as it was after the crash in April this year.
However, a few computers still have to be connected to the network before the record performance of 180 million TH / s.
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