While data centers from Texas to Siberia in Russia are scrambling to provide space and power, it will be months before the big bitcoin miners who left China due to the ban can restart operations, and many of the smaller ones Small miners may not be able to relocate at all.
Bitcoins are typically created or "mined" by high-powered computers located in data centers in different parts of the world, by competing to solve complex mathematical puzzles while using intensive use of electricity.
China's bitcoin mining industry once accounted for 70% of the global market's production capacity. However, after the State Council announced at the end of May this year that it would crack down on bitcoin trading and mining due to financial risks, the industry fell into chaos.
Chinese miners are now closing (mines) or preparing to go to sea, hoping to find places with light regulations, low temperatures to keep their machines from overheating, and cheap electricity, preferably absorbing electricity from hydropower stations or oil fields.
Global bitcoin mining consumed almost as much electricity as Austria consumes in a year in early July, even though that figure has dropped 50 percent since May, according to estimates by researchers at the University of Cambridge.
Although in the long run, going overseas will bring new mining centers to the world, but currently miners are facing challenges in overseas data center capacity and logistics.
Thomas Heller, Compass Mining's chief commercial officer, explained: "Miners going to sea cannot start up in June or July." Overseas, the installation and deployment will be carried out through customs.
The miners said that for small Chinese miners who have less cash on hand, it is more difficult to pay the freight in logistics, and they are not familiar with overseas operations, so it may be difficult to find a custody center they can trust.
However, Compute North, which operates managed bitcoin mines in Texas, Nebraska and South Dakota, is accelerating its expansion plans for next year to meet "substantial demand" from China.
Dave Perrill, CEO of Compute North, said: "In my opinion, there is no doubt that as the infrastructure develops, in the next 6 months, 9 months, 12 months, we will see a large number of mining machines put into warehouses. Medium...we are aiming for large-scale deployments in the first and second quarters of 2022...(but) this is not a simple switch, it will require a lot of complex engineering, procurement and construction."
Moscow-based BitRiver, which operates data centers in Siberia that host bitcoin miners, has accelerated plans to build new facilities and expand existing ones to meet some of the demand for outsourcing.
BitRiver estimates that the demand for its mining farm will increase to 1.5 million units, which will require up to 2.5 GW of power, which is dwarfed by their current three data centers with only 125 MW.
"We know mining companies are leaving China because they're coming directly to us," said BitRiver spokesman Roman Zabuga.
Seat shortage
Adam James, senior editor at OKEx Insights, estimated that China’s ban on bitcoin mining could take 90% of bitcoin mining machines offline. Many miners sold their machines in desperation.
Didar Bekbauov, co-founder of Hive Mining, a Kazakhstan-based colocation centre, said it receives about four inquiries a day from potential Chinese customers asking about prices, availability and regulations.
Kazakhstan data centers simply don’t have enough readily available space to host these miners, he said.
However, the turmoil in China's bitcoin mining industry is good news for some.
“After hundreds of thousands of bitcoin mining machines in China suddenly went offline, our revenue automatically increased,” said Dale Irwin, president of Greenidge Generation, a New York-based bitcoin mining and power generation center.
The algorithm that controls Bitcoin still maintains a normal production rate, and it is adjusted about every two weeks. If there are many machines mining, more computing power is needed to generate Bitcoin; if the number of mining machines on the line decreases, mining Mining difficulty will also be reduced.
Bitcoin’s hashrate hits six-month lows since China’s crackdown.
Kevin Zhang, vice president of business development at Foundry, a U.S.-based crypto mining, financing and consulting firm, said the crackdown could drive geographic diversification in the long run.
“Many places where bitcoin miners have not gone before, such as Southeast Asia, South America or Australia, will have an incentive to take advantage of local renewable energy,” he said. “There was no need for these energy markets before.”
By Alun John; Samuel Shen | Reuters
Compilation: HuAnTech HuAnTech
Source: https://www.reuters.com/business/limited-capacity-difficult-logistics-slow-chinese-bitcoin-miners-global-shift-2021-07-07/
