Bitcoin miners are moving out of China as authorities intensify their crackdown, the heads of some of the world’s biggest cryptocurrency exchanges said.
“We’re seeing a lot of those miners moving out of China to other places,” Chao Changpeng (趙長鵬), chief executive officer of Binance Holdings Ltd (幣安控股), the world’s biggest cryptoexchange by reported turnover, said in an interview at the Qatar Economic Forum on Tuesday. “Some of them are sending their mining equipment to overseas. There’s big shipments.”
Chao said he has seen movement by clients in Binance’s mining pool, which combines the computing power of number-crunching machines that verify cryptocurrency transactions.
Photo: EPA-EFE
China’s moves have injected uncertainty into the cryptocurrency market and helped pull bitcoin down to the lower end of its recent trading range, with the coin briefly falling below US$30,000 on Tuesday, after having reached nearly US$65,000 in the middle of April.
The hashrate, which measures the processing power used in bitcoin mining and is used as a proxy for mining activity, has also dropped by about 40 percent in the past couple of weeks, data from BTC.com showed.
While a lower hashrate is often portrayed as a negative for bitcoin, a temporary disruption of mining power as rigs are moved out of China could also be embraced by some cryptocurrency bulls who argue that a concentration of mining capacity has long been a vulnerability for an asset prized by proponents for its independence from governments and central banks.
“In the future you’ll have a different geographical distribution of hashpower,” Sam Bankman-Fried, a former Jane Street trader who now runs the cryptoderivatives exchange FTX, said in an interview yesterday. “It’s expensive to move rigs, but it’s not impossible.”
China’s state-run Global Times reported that multiple bitcoin miners in China’s Sichuan Province were closed on Sunday as authorities intensified their crackdown.
On Tuesday, Bloomberg reported that China had summoned officials from its biggest banks to reiterate rules banning cryptocurrency services that were first issued in 2013.
China’s measures mean the nation’s share of bitcoin mining could fall from an estimated 65 percent to less than 50 percent by the end of the year, said Dan Weiskopf, a portfolio manager at the Amplify Transformational Data Sharing exchange traded fund, an actively managed fund that is composed of blockchain-related stocks, with about 20 percent of its portfolio in cryptominers.
Alternate destinations for Chinese mining operations include Russia, Kazakhstan and Texas, market participants said.
Weiskopf cited Canada, Sweden and Argentina as other possibilities.
“The decline in hash is probably a short-term phenomenon and evidence of China miners coming offline,” he said in an e-mail. “It is a net positive for North America miners who are now expanding and scheduled to have a lot of hash come online later in 2021 and into 2022.”
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