As Beijing’s attitude to crypto mining hardens, and as Chinese provincial and other administrators crack down on the industry, Chinese miners are decamping to countries in which they are less unwelcome.
Some early favorites among destinations for miners looking to relocate their operations are Kazakhstan, North America and Northern Europe.
Crypto mining farms in Kazakhstan — a large coal producer just across the border from the northwestern Chinese region of Xinjiang — are seeing an uptick in Chinese miners’ demand for services. Didar Bekbauov, a co-founder of Xive, a crypto mining company based in the Kazakh city of Almaty that offers hosting services, told Forkast.News that many miners that had operations in China had reached out to his company, and that he was busy scheduling visits for those who wanted to pay a visit to his mining facilities in Kazakhstan.
“One [Chinese miner] has already come for a visit, and another one wants to visit in July,” Bekbauov said, adding that another Chinese miner had signed a contract with his company and made pre-payment to book slots for July. “[Chinese miners] are already actively coming and searching for relocation.”
Build it and they will come
Dmitriy Ivanov, a sales director at Enegix, one of the biggest crypto mining firms in Kazakhstan, which last year opened a 180 megawatt data center, told Forkast.News that in addition to offering hosting services for Chinese miners, it was currently in talks with other companies to jointly invest and build new mining facilities in the country.
BIT Mining, a New York-listed Chinese crypto mining firm, announced yesterday that it had delivered its first batch of mining machines to Kazakhstan. The first consignment, consisting of 320 mining machines, is expected to be in operation by June 27, the company said. It plans to deliver second and third batches, totaling 2,600 machines, to Kazakhstan by July 1.
Last month, BIT Mining said it was investing US$9.33 million to build and operate a data center in Kazakhstan. BIT Mining’s move comes after its data center in China’s Sichuan Province was informed on June 19 that its power would be suspended, effective 9 pm local time the same day, according to a company statement.
Beijing-headquartered Canaan, one of the world’s largest crypto mining equipment makers, is actively expanding overseas. Earlier this month, it announced that it was opening its first after-sales service center outside of China, also in neighboring Kazakhstan.
Edward Lu, a senior vice president at Canaan, said in an interview with Forkast.News that the company’s service center in Kazakhstan was only the first step in Canaan’s setting up shop overseas, and that it was hoping to establish more operations in the future in places such as North America and Northern Europe — “wherever our clients are.”
Lu said that in the first quarter of 2021, overseas markets contributed more than 80% of the company’s sales, primarily thanks to sales in North America, Northern Europe and former Soviet countries, particularly Kazakhstan.
He noted the recent regulatory crackdown on crypto mining in China, saying: “We’re seeing many Chinese miners looking to relocate overseas to places such as North America, Northern Europe and Kazakhstan. Given Kazakhstan’s [geographical] convenience, we could foresee that many of our mining rigs will be moved to Kazakhstan in the next few months.”
The country’s government, however, is looking to regulate the industry further and is proposing to impose taxes on crypto miners. According to a report by local media outlet Kursiv, a new rule, part of amendments to the tax code, is under review in the Senate that would require miners to pay one tenge (about US$0.0023) per kilowatt hour for the electricity they consume. If the rule passes, the charge will take effect on Jan. 1, 2022.
“It’s not a game changer,” Ivanov said. “It does signify that the government is intent on taxing it, having a profit from it, and letting it operate. In that way, it is an indication of a green light, so to speak.”
The United States appears to be another popular destination for Chinese crypto miners.
Miami Mayor Francis Suarez, for instance, last week invited crypto miners to use the nuclear power available in the city in an interview with CNBC, and last month tweeted: “We want to be the crypto mining capital of the world.”
Texas is also no slouch when it comes to the wave of crypto mining migration. On June 5, state Governor Greg Abbott announced a law that would create a master plan for expanding blockchain in the Lone Star State. Abbott described himself as a supporter of the crypto law proposal, saying: “[Crypto] is increasingly being used for transactions and is beginning to go mainstream as an investment. Texas should lead on this.”
In May, BIT Mining announced that it was investing US$25.7 million in a crypto mining facility in Texas that it will build and operate jointly with Dory Creek, a wholly-owned subsidiary of fellow Chinese cryptocurrency cloud mining platform BitDeer.
“Following our investments in cryptocurrency mining data centers in Texas and Kazakhstan, we are accelerating our overseas development of alternative high-quality mining resources,” BIT Mining CEO Xianfeng Yang said yesterday.
Poolin, a Hong Kong-headquartered crypto mining pool with significant operations in China, is also looking elsewhere.
“We’ve considered literally every place across the globe because that’s what we do. We consider places. That’s my job,” Poolin Vice President Alejandro De La Torre told Forkast.News last week while on a business trip to Texas to meet potential partners. “However, I think Kazakhstan has already hit a sort of a ceiling as to how many miners can move into the country.”
De La Torre said that Poolin was looking at options across both Canada and the United States. He said the firm’s top priority was to find cheap electricity and to keep an eye on the environment by using hydro or solar power.
The U.S. state of Maryland may also be an option for miners. On Monday, CNBC Senior Correspondent Eunice Yoon tweeted that a logistics firm in the Chinese city of Guangzhou had told the network it was shipping 3 metric tons of Bitcoin mining machines to the state, which borders Washington, D.C.
As strong a motivation as inexpensive power may be, it is nevertheless costly to move rigs en masse from one side of the world to the other.
“It’s not cheap to move across the globe,” De La Torre said, adding that not all Chinese miners would be able to take such a step.