- In May, China tightened down on its domestic crypto mining business, but many miners have figured out how to keep mining while avoiding discovery.
- Experts estimate that China still controls up to 20% of the global Bitcoin network.
- As hydroelectric dams in Sichuan and Yunnan provinces dry up, miners are considering expanding their operations overseas.
Securing by Nickname Identification
Ben is mining for Bitcoin in the Chinese province of Sichuan, hoping to avoid being apprehended by the authorities every day.
Ben is performing like other miners of crypto who have gone underground after Beijing crackdown on the business earlier 2021. He was the only one who requested to be recognized by his nickname to protect his safety, and he’s getting inventive to avoid detection.
Ben has dispersed his mining equipment over several locations so that no single activity stands out on the country’s power grid. He’s also gone “beyond the meter,” getting power directly from small, local power sources such as dams that aren’t connected to the bigger grid. He’s also made steps to hide his digital footprint’s geographic location.
After the Wet Season, what’s next?
However, China’s underground miners are facing a new and significant challenge: the wet season is finished.
Miners used to load up their equipment and transport it to Xinjiang or Inner Mongolia to use coal-fired power stations to create electricity. Both of those areas are now off-limits to miners.
“It’s going to get extremely fascinating,” Zhang predicted, predicting that China’s share of the global bitcoin market will fall to 5% when hydro dams dry up. “Several miners will have to give up and ship their equipment abroad.”
When you have to unplug and re-route your miners over and over again, Zhang told reporters, it’s “extremely painful.” As a result, he believes that many would look to North America, where they will be able to sign longer-term contracts. “It’s a more stable structure,” he continued, “and it won’t shift on you overnight.”
Ben is currently debating whether or not to pursue that path. Ben, on the other hand, is stuck in a holding pattern until he can make a deal with an American host. Although he claims to be selling some of his Antminer S19 ASICs, he is keeping the majority of his machines till he finds out what to do next.
“These are effectively money printers,” Zhang stated, pointing out that these machines provide almost rapid access to Bitcoin or US dollars if you liquidate your crypto holdings. That kind of insurance policy is extremely important in a country with strict capital controls.
“It’s one of the main reasons why a lot of miners haven’t given up and sold their equipment,” Zhang noted, “because it offers them access to financing from other countries once they’ve got it connected up.”