Author: Jasmine; Editor: Wen Dao

The fluorescence emitted by the rows of bitcoin mining machines went out. On the evening of June 19, the video of the shutdown of the bitcoin miners in Sichuan was circulated on the social networks of the currency circles, expressing their helplessness with the background soundtrack of "Bye".

The "Notice of Sichuan Provincial Development and Reform Commission and Sichuan Provincial Energy Bureau on Cleaning up and Closing Virtual Currency "Mining" Projects" issued on June 18 shows that for virtual currency "mining", relevant power companies in Sichuan need to Before June 20, the work of screening, cleaning up and shutting down will be completed.

The shutdown came as scheduled, followed by a continued decline in the Bitcoin computing power of the entire network. As of 00:00 on June 21, OKLink data shows that the Bitcoin network computing power is 124 EH/s, which was 126 EH/s the day before, which is more than 30% lower than the historical peak of 181 EH/s on May 13 this year. , has fallen to the level of November last year.

Affected by Chinese regulation, it is a foregone conclusion that Bitcoin mining will withdraw from China. In April of this year, academic research data showed that Chinese miners accounted for more than 75% of the Bitcoin network's computing power. From June 20th, this ratio will decrease indefinitely.

first level title

Texas may become the "biggest winner"

The news of the power outage in Sichuan and the shutting down of miners even made it to the Washington Post. In the report, Jiang Zhuoer, the founder of Leibit Mining Pool, was described as a "Chinese Bitcoin giant" who was going to the United States. Miners moved to Texas and Tennessee. Miners with the same idea as Jiang Zhuoer are already preparing shipping containers, intending to load his mining machines on the oil fields in West Texas.

Texas seems to be a promising new location for Chinese miners. Companies such as Bitmain, Blockcap, Argo Blockchain, and Great American mining have previously "built stations" in the state. The biggest attraction there is abundant and cheap electricity resource.

In February this year, people were stunned by the news that “1 kilowatt-hour of electricity was 65 yuan” in Texas. At that time, many states in the United States were hit by winter storms. Millions of homes and businesses were without power. Texas was the most severely affected state. In some areas, electricity prices have soared 200 times. But if you do a careful calculation, before the skyrocketing price, 1 kilowatt-hour of electricity in Texas, the United States, was around 5 cents, which is equivalent to more than 30 cents in RMB. This price is almost equivalent to the mining electricity price during the flood season in Southwest China.

The cheap electricity price in Texas is based on the abundant renewable energy infrastructure. 20% of the local electricity comes from wind energy, and the distribution of electricity is more market-oriented. Users can freely choose electricity suppliers. In addition, there are local politicians who support crypto assets, such as Governor Greg Abbott, who has publicly supported Bitcoin mining, arguing that it may be a valuable industry for the United States.

In addition to Texas, Kentucky is also attracting bitcoin miners through policy guidance. In March, the coal-rich region passed a law offering tax incentives for bitcoin mining businesses that invest $1 million in new machines in the state.

Areas with abundant energy and open policies in the United States are indeed good choices for Chinese miners who want to relocate. But this world-class capitalist power is also concerned about the environmental impact of Bitcoin mining’s high energy consumption, especially liberal environmentalists everywhere.

This year, activists in Finger Lakes, N.Y., had a dispute with a Connecticut private equity firm over the conversion of an old natural gas-fueled power plant into a bitcoin mining farm. As a result, New York State’s legislature is considering a bill that would prevent bitcoin mining at carbon-emitting power plants.

first level title

Chinese mining companies have established stations in Kazakhstan

In addition to some regions in the United States, Kazakhstan, which is adjacent to China, has also become one of the choices of miners. Honeycomb Finance noticed that as early as May 24, a Bitcoin mining company headquartered in Shenzhen had released news to the outside world, choosing to go overseas to "neighboring countries".

A month ago, Bit Mining, formerly known as "500 Lottery Network", was seen in overseas media news because of its plan to build bitcoin mining in Kazakhstan. Bit Mining plans to invest more than 9 million US dollars to build a 100-megawatt data center locally. The project is implemented in cooperation with two local companies, of which Bit Mining holds 80% of the shares. According to reports, the relevant cooperation of the project will take effect on July 1, 2021.

It is worth noting that just three days before this news came to light, that is, on May 21, a meeting of the Financial Stability and Development Committee of the State Council made it clear that it would "crack down on bitcoin mining and trading." It is also from this day that Inner Mongolia, Xinjiang, Sichuan and other areas where Bitcoin miners are concentrated in China have successively implemented policies and began to clean up Bitcoin mining companies.

Now it seems that Bit Mining is extremely sensitive to policies, and it seems that it had no illusions about continuing to engage in mining in China at that time. In May, the company also announced an investment of US$25 million to build a new data center in Texas, USA. This investment is one of the agreements signed with Dory Creek, a wholly-owned subsidiary of Bitdeer, a mining machine and cloud computing company. Build and operate a 57 MW mining facility, primarily using low-carbon energy.

Kazakhstan, which is favored by Bit Mining, has gradually become a new force in the rise of Bitcoin computing power in the past two years. According to data from Cambridge University’s BTC mining tracking tool “Bitcoin Mining Map”, Kazakhstan’s computing power once exceeded 6%, ranking fourth in the world, second only to China (65%), the United States (7.2%) and Russia ( 6.9%).

Some local miners revealed to domestic currency circles that Kazakhstan plans to collect mining tax at the price of 1 tenge per kilowatt-hour (that is, the local currency unit, equivalent to 0.002 US dollars) from 2022. This information has not been confirmed by authority.

But yes, last June, Kazakhstan passed a legal amendment clarifying the regulation and taxation of cryptocurrency mining, which will impose a 15% fixed tax on mining in an attempt to boost its oil-dominated economy. and respond to the economic fallout from the COVID-19 pandemic.

Three months later that year, the country’s digital development minister, Baghdad Musin, said they were negotiating to attract investments worth 300 billion tenge (the local currency unit, equivalent to $714 million) into the cryptocurrency space. He disclosed that there are already 13 mines in operation in the country, and another 4 are under construction. "This industry has invested more than 80 billion tenge (190 million U.S. dollars)."

From the perspective of location conditions for migration, Kazakhstan, which borders western China, seems to be a more convenient choice. From the perspective of long-term sustainable supply of clean energy, the policy support and energy conditions of Texas, the United States, are more certain.

In comparison, Russia, another neighboring country of China, can also be regarded as a country with a large computing power. The country’s well-known mine BitRiver is located in the Irkutsk region, only a few kilometers away from the Bratsk Hydropower Station with a generating capacity of 4,515 megawatts. Kilometers away, the all-inclusive electricity price is said to be lower than Sanmao, which is comparable to the electricity price for domestic mining.

However, Jiang Zhuoer expressed his concerns about Russia's business environment in an interview with the Washington Post. He said that his colleagues' mining machines had been confiscated by corrupt police.

In any case, for Chinese miners who want to continue digging gold in the Bitcoin mining industry, going to sea has become a foregone conclusion. However, a more practical problem is that before the global epidemic is generally under control, both mining machines and personnel going abroad will face cumbersome procedures. At the current stage, for miners, it is a loss of money; for the Bitcoin network, it is a period of decline in computing power; for the market, it is another low tide of prices.

In the summer after June 20, 2021, the wet season in Sichuan will remain, but no more Bitcoin will be produced in China.