Bitcoin Mining Companies Exiting China As Authorities Crackdown On Cryptocurrencies

Forbes

A bitcoin mine site near Kongyuxiang, Sichuan, China.

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Chinese cryptocurrency mining companies are moving their operations to other countries as Beijing redoubles its efforts to target businesses involved in the mining and trading of bitcoin and other digital currencies.  

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Shenzhen-based BIT Mining said on Monday that it had already delivered 320 mining machines to Kazakhstan, a Central Asian country neighboring China. The company expects to have another 2,600 mining machines delivered to the country before July 1, and its remaining machines will be sent to “overseas data centers over the coming quarters.” 

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“We are accelerating our overseas development for alternative high-quality mining resources,” Xianfeng Yang, CEO of BIT Mining, said in a statement. “We believe our vision and early-mover advantage will enable us to be agile in responding to the globally evolving regulatory environment.”

BIT Mining’s redeployment comes after a local electricity company cut off the power supply to a subsidiary of the firm in China’s Sichuan province last week. The Ganzi Changhe Data Center received a notice on June 19 that its power supply would be suspended later that same day. BIT Mining said its operations in Sichuan account for only about 3% of its revenue in the month of May.

Sichuan authorities have reportedly ordered the shutdown of 26 companies suspected to be involved in crypto mining activities. They also requested local electricity suppliers to halt the power supply to crypto mining projects, according to media reports. 

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BIT Mining said it would invest $35 million in crypto mining data centers in Kazakhstan and the U.S. state of Texas less than a week after Chinese officials tightened regulations on the trading of bitcoin and other digital currencies in May. The New York-listed company also runs a crypto mining pool called BTC.com that was acquired in February this year from Bitdeer Technologies, which is controlled by former Chinese billionaire Jihan Wu. 

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Cryptocurrencies are advertised on a billboard in Almaty, Kazakhstan.

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Another crypto company moving abroad to escape China’s crackdown is Canaan. The Hangzhou-based crypto mining hardware manufacturer said in early June that it had established its first overseas after-sales service center in Kazakhstan. The country’s cheap energy prices and shared border with China have made Kazakhstan an increasingly popular destination. It is now the world’s fourth-largest bitcoin mining site with a 6% share in global bitcoin hash rate, according to Cambridge Bitcoin Electricity Consumption Index. 

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Other Chinese crypto companies are said to be looking to relocate their businesses to the United States. A Guangzhou-based logistics firm reportedly said it had recently airlifted 3,000 kilograms of bitcoin mining equipment to Maryland. 

Some U.S. cities are taking a different tack, they are actually hoping to attract more Chinese crypto miners by pointing to their low energy rates. Miami Mayor Francis Suarez told CNBC last week that his city can be a new hub for Chinese crypto mining companies with its abundant supply of low-priced nuclear energy. 

The increasing migration of Chinese crypto companies is viewed as a success for Beijing’s campaign to rid the country of the mining and trading of digital currencies. On Monday, the People’s Bank of China ordered Ant Group’s Alipay and four state-owned banks to cease offering financial services for any cryptocurrency-related activities. That order came after government officials sought to eradicate crypto mining hubs in Sichuan, Inner Mongolia and Xinjiang.

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Author: Zinnia Lee, Forbes Staff


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