The tide of overseas mining under the regulatory policy: it is not easy for the head miners to “go abroad”, and small and medium miners collectively wait and see

Under the regulatory policy, the head miners started to “go abroad”, the fate of small and medium miners is shaking, mining will eventually achieve oligarchization.

The tide of overseas mining under the regulatory policy: it is not easy for the head miners to "go abroad", and small and medium miners collectively wait and see

In May, the mining boom that has been gaining momentum has received a heavy blow.

The State Council’s Financial Stability Development Committee issued a letter cracking down on bitcoin mining and trading, “suspending power supply to mining farms” in some areas of Sichuan and Xinjiang, and setting up a reporting platform for virtual currency “mining” enterprises in Inner Mongolia …… The mining industry began to enter a period of tension.

The actual fact is, a large number of mining farms are shut down and the computing power has plummeted; the price of mining machines has slipped and is close to being cut. The overseas mining market has ushered in a new spring, large mining farms seeking to “go overseas”, mining hosting a hard to find, some mining companies began joint ventures or independent construction of mining farms.

At the same time, most small and medium-sized miners are still on the sidelines, the risk of “going abroad” is unpredictable, coupled with a lack of strength. What can they do in the storm?

01 Regulatory policies come one after another, small and medium miners have not considered “going abroad” for the time being
On May 21, with the State Council’s Financial Commission’s order to “crack down on bitcoin mining and trading,” the regulation of cryptocurrency mining took a step up, and actions to crack down on the mining boom kicked off.

On May 25, Inner Mongolia issued eight measures to combat and discipline virtual currency “mining” behavior (draft for comment), aimed at further cleaning up virtual currency mining behavior; Sichuan held a virtual currency “mining” symposium yesterday, in order to fully understand the situation related to virtual currency “mining” in Sichuan.

Before that, Sichuan, Xinjiang, some areas have “suspended the power supply to the mine” situation, Inner Mongolia is the establishment of virtual currency “mining” enterprise reporting platform, in order to fully clean up and shut down virtual currency “mining” project.

As we all know, most of the domestic mining sites are located in areas with sufficient power resources and cheap electricity, such as Inner Mongolia, Xinjiang, Sichuan, Yunnan, etc. are the gathering places of mining sites. As these areas have come and gone with regulatory policies, the mining industry has been in and out of trouble for a while.

The most direct impact of the policy, in addition to the plummeting price of coins, followed by the fluctuation of mining machine prices.

“Miner prices are down at least 30% from their peak in April and continue to fall.” Jahon Kabilov, chief executive of cryptocurrency mining pool Sigmapool, told Babbitt. He said the prices of some miners are even close to being cut.
At the same time, with a large number of mining farms shutting down, what can be seen is a significant drop in bitcoin’s network-wide computing power.

Data from OKLink, the Ouko cloud chain, shows that on May 30, bitcoin’s network-wide difficulty dropped 15.97% to 21.05 T. Every day throughout the difficulty cycle, arithmetic power fell. Accordingly, bitcoin miners’ revenue also shrank. $1.466 billion was earned by bitcoin miners in May, a 14.09% drop from the previous year.

On the other hand, in response to regulatory policies, several well-known mining pools and related companies are divesting their domestic-related businesses. Well-known mining pools such as Lepit Mining Pool have suspended the provision of mining machine generation and hosting services to mainland China; mining pool service providers such as Bitty Fawn and Mars Cloud Mining have blocked IP access within mainland China.

At the same time, the mining machine abroad has become the hottest topic in the mining circle. “Going abroad” is actually not an emerging trend, since 2018, the domestic mining circle has been miners trying to go abroad, Canada, the United States, Russia, Iran …… no shortage of Chinese miners. They live electricity by electricity, where there is cheap electricity, there they will be.

However, to this day, for most miners, miners going abroad is still not the big trend.

“Have not considered the issue of going to sea, can continue to continue, it is not possible to stop for a period of time.” Chen Jie (a pseudonym), the head of a mine in Yunnan, said that many small and medium-sized mines are still on the sidelines, waiting for regulatory policies to fall into place.
Veteran miner Yang Tao (pseudonym) also said in an interview with Babbitt, “The mining and coin circles are both disorderly capital markets, and capital is the dominant player. The policy doesn’t really have much of an impact on me at the moment, and if there is a substantial crackdown in the future, I may choose to go offshore.”
As they say, the fact is that at the moment, miners going abroad is perhaps more of an option for large miners and some medium-sized mines. sigmapool CEO Jahon Kabilov told Babbitt that only large and medium-sized miners are currently seeking to host miners or build mines in Kazakhstan, and there are no small mines.

Mark, a veteran miner from as far away as the United States, put it bluntly: “Most Chinese miners don’t have the ability to go offshore, the volume is too small.”
Obviously, it has not yet become a major trend as “going abroad” faces many risks and problems such as policy changes and insufficient strength of mining farms. There is no way to know what the future holds, but for now, the pioneering force will only be the medium and large mining companies with strong capital advantages.

Mark believes that “mining will eventually become oligopolistic.” As it is said, the mining industry capital gathering, the head effect is becoming more and more obvious, and the process of the arithmetic power to China may have been irreversible.

02 The rise of overseas mining
“In general, Chinese regulatory policies have created a huge demand from Chinese miners for Russian and CIS (Commonwealth of Independent States) mines.” Jahon Kabilov said, “Almost all well-known mines are full and have no idle capacity.”
Compared to the hesitation and anxiety of domestic miners, foreign mining practitioners appear more optimistic and relaxed, and they even see China’s crackdown on mining as an opportunity.

“At the moment we can see that some Chinese miners are planning to move their mining machines to other countries or regions, which could be a good opportunity for foreign data centers to increase the number of Chinese customers hosted on their mining platforms and make the global allocation of BTC’s arithmetic power more decentralized. In the next few months, expect to see some arithmetic migration.” Antony (a pseudonym), head of a well-known overseas mining pool, told Babbitt.
For risk reasons, mid- to large-sized mining companies accelerating their “offshore” efforts are more likely to choose the U.S., Russia and Kazakhstan.

“Large mining companies are looking for safe and legal mining operations, so they prefer to negotiate with the largest hosting companies in those regions. As far as I know, Russia and Kazakhstan can offer a fair price for mining (a little higher than Sichuan, but more stable) and the climate in these regions is ideal for mining (cooler temperatures, which saves on miner cooling costs).” Antony said.
According to him, the average hosting price per miner in Russia and Kazakhstan is about $0.047-0.049 (about $0.3-0.31), including management and maintenance costs, but not including repair costs.

As for North American regions such as the United States, on the one hand, there is a stable policy and a high level of compliance. On the other hand, some mining companies such as Bitmain have had other operations there before, so it would be relatively easy to move their mining machines and industries to North America.

However, it’s not easy for even large mining companies to “go offshore” right now.

Antony admits, “The fact that most miners are just looking for available capacity is a daunting task in itself, as the vast majority of data centers are already overloaded and have absolutely no hosting space.”
That’s why it may take some time for miners to move on, he said. Data centers can’t accept such a large number of mining equipment at the moment, so they are in desperate need of expansion. It is reported that some data centers have already sold their slots for the next 1-3 months or even more in advance.

Even if there are still some platforms that have hosting slots, they will become more picky and demanding in their choice of miners and customers.

For example, they have a hard time accepting older generation mining devices like the Antminer S9, preferring newer generation miners like the Antminer S19 pro.

For hosting providers, the main reason is limited machine space. Hosting providers are interested in selling power to miners, and a spot on the shelf could hold an Antminer S9 or S19, but the S19 consumes more power, so they clearly prefer the latter.

Also, it is more difficult to maintain older generation miners, as opposed to the Antminer S19 miners which are mostly new and easier to maintain. Of course, there are no absolutes, and hosting providers can also accept older generation miners, but only if there is a large amount of equipment available.

“But the price of electricity for these types of miners may be higher.” Antony said.
In Kazakhstan, there are actually smaller hosting platforms that also have idle machines and can offer even lower electricity rates. But these platforms bring with them elevated risks.

In Kazakhstan, there are still companies working illegally, and customers may be attracted by the low electricity prices,” Antony said. But in reality, service providers can steal electricity, which could be the reason for mine closures or even jail time.”
With all the restrictions and risks, some capable miners are looking to set up their own mines overseas, with some opting to enter into joint ventures with local mining companies.

On May 24, Bit Mining (formerly announced that it had partnered with a Kazakh company to co-invest in a mine in Kazakhstan, with plans to invest 60 million yuan (about $9.33 million) to build and operate a mine with a load of 100 megawatts.

On June 2, Jia Nan Technology also announced on an analyst call that it will launch its own mining in Kazakhstan in early June.

03 Embracing regulation and looking forward to the future
Although policies are being introduced one after another, most practitioners still have hope for the industry. While agreeing with the need for regulation, they also expect that there is room for policy to moderate.

On June 2, Zhang Nangan, chairman of Jia Nan Technology, said on a conference call that regulation of Bitcoin and its mining industry points more to financial fraud and other behaviors that disrupt the normal market order, as well as avoiding the transmission of individual speculative risks to society. So financial regulation is constructive, not destructive, to the bitcoin mining industry.

He believes that in the long run, financial regulation policies are conducive to the healthy and orderly development of the cryptocurrency industry and promote the maturation of the blockchain and ASIC chip design technology behind cryptocurrencies.

Sichuan held a research forum yesterday on the much-anticipated situation of virtual currency “mining”. According to the surging news, a staff member of the Sichuan Energy Supervision Office stressed that “only a small-scale understanding of the situation first, for the follow-up action has not yet formed a specific tendency and ideas.”

In this regard, a senior miner in Sichuan believes that “the current overall no news is good news, this meeting in Sichuan is mainly to discuss the severity of power station abandonment and losses and other issues. In addition, the Xinhua News Agency article mentioned ‘orderly withdrawal’ also gives a lot of room for imagination. For now, at least based on the actual situation in Sichuan, abundant water is certainly able to transition over, and of course there will be the need for increased costs in terms of electricity prices, so for now it’s still OK as to whether mining and the safety aspects of the miners can continue.”
As for China’s regulatory policy, most foreign mining practitioners also hold a recognized attitude and agree with the need for legal compliance.

“The cryptocurrency market is risky, it’s like the Wild West – there are no rules, no principles. Some investors don’t understand how they can lose all their savings in one day. The government is doing this because it wants to protect them.” Kabilov, who is based in Kazakhstan, told Babbitt.

Back in June last year, Kazakhstan’s minister of innovation and aerospace industry reportedly announced plans to attract $738 million in investment in digital currency mining over three years. in September, Kazakhstan again planned to raise more than $700 million for cryptocurrency mining. In May of this year, Kazakhstan, for its part, developed a roadmap regarding the development of the crypto industry and blockchain technology.

Kazakhstan is already on the path to compliant mining. Although the two countries have different stances on mining, Kabilov still deeply agrees with China’s implementation of regulation.

He said China, as a member of the Paris Agreement, has the ability to reduce its CO2 emissions. “As far as I know, during the dry season, bitcoin mining mostly gets its power through coal-fired thermal power plants. The Chinese government has put its climate and energy principles in order, making it clear that all industries, including cryptocurrency mining, will abide by these rules. Obviously, this is all logical.”
Prior to this, MicroStrategy CEO Michael Saylor expressed similar sentiments, “A crackdown on Chinese miners will radically reduce the carbon footprint of bitcoin mining, reduce FUD (fear, uncertainty and doubt) in China, and support progress on ESG (environmental, social and corporate stewardship) goals. “

On the other hand, Kabilov said that despite the plunge in mining machine prices due to regulatory reasons, demand for mining equipment is still high, and most data centers in Kazakhstan order mining machines in China (they help customers buy them or customers bring their own equipment).

“Chinese mining pools are declining in terms of arithmetic power, but the share they occupy is still strong. I don’t think China will lose the number one position in the near future.” He said.
Antony, on the other hand, sees the introduction of new regulatory policies having a big impact in terms of profitability. The policy has caused bitcoin prices to plummet and some mining sites to be shut down, but the ensuing drop in difficulty of bitcoin mining has certainly allowed mining profits to start increasing.

As mentioned above, bitcoin’s network-wide difficulty was reduced by 15.97% to 21.05 T. data shows that bitcoin mining difficulty will also be reduced by 12.84% to 18.34 T after an expected 9 days and 15 hours.

“Miners can enjoy the lower difficulty for a while and prepare for a new price increase.” Antony said.
Antony’s attitude is very optimistic. He said the upcoming new policy could lead to another price fluctuation. But in the long run, bitcoin is sure to hit new highs.

Posted by:CoinYuppie,Reprinted with attribution to:
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