From China cryptocurrency mining ban in May it triggered an exodus of miners and a global race to relocate millions of the clunky, energy-intensive machines they use to solve complex puzzles and earn bitcoins.
Fourteen of the world's largest cryptocurrency mining companies have moved more than 2 million machines out of China in the months after the ban, according to data compiled by the Financial Times. Most of the machines were hastily moved to the US, Canada, Kazakhstan and Russia.
Bit Digital, one of the largest cryptocurrency mining companies listed in the US, has hired an international logistics company to extract its property from China and is still waiting for a batch of almost 1,000 machines to be released from the docks. in New York Harbor.
“We started the migration of our fleet in March 2020, which in retrospect was a big step. When the ban was announced, we had 20,000 miners in China, "said Sam Tabar, chief strategy officer at Bit Digital. Still, the company said it had to abandon 372 machines in China, which had "reached the end of their useful life."
Eight of the 10 largest public mega-farms based in North America have expanded the number of machines in their fleets since China's ban, FT figures show.
When the ban came, Toronto-based crypto mining company Hut8 was bombarded with offers from panicked Chinese sellers, said Sue Ennis, the company's vice president of corporate development and investor relations. "We got calls from providers that were pretty opaque and one-sided," he said. "They would ask us to pay 20 million dollars without recourse if it does not arrive or arrives broken." The company ended up adding 24,000 machines in June, from Chinese company MicroBT.
The "frenzied sell-offs" triggered by China's ban caused the price of an Antminer S19, a popular model among industrial miners, to drop 41.7 percent from May to July, an analysis by Luxor mining company showed.
Chinese crypto mining machine maker Bitmain, the maker of the S19, had sold 30,000 machines to Marathon Digital Holdings, a Las Vegas-based mining company, in August; while Maryland-based Terawulf bought another 30,000. The company announced in June that it would suspend sales of its machines to "help the industry make a smooth transition" and reduce the "great pressure" on the market.
Outside of the US, Kazakhstan has become a leading mining center. FT data shows that most of the machines going to Kazakhstan come from the Chinese mining company Bitfufu, which shipped 80,000 machines to farms in Kazakhstan, and BIT Mining, which shipped 7,849 machines in August.
Another beneficiary of China's ban was Russia, where in the weeks following China's cryptocurrency mining ban, Moscow-based infrastructure hosting company Bit Cluster received more than 5,000 machines from China, while the company Russian cryptocurrency mining BitRiver said that since the ban it now houses 1.8 million exiled Chinese miners' machines.
"The focus of the market has shifted from a lack of equipment to a lack of space for its location," said Roman Zabuga, BitRiver spokesman. A couple of weeks before the ban, the company had to reject a deal with a Chinese customer seeking to get rid of another million machines, he said.
According to Jaran Mellerud, a research analyst at Arcane Crypto, just under 700,000 Chinese machines have not been turned on again after the ban and are likely to be in storage. Since many of these are older generation machines, like the Antminer S9, it is less profitable to ship them to places like the United States. In July, the price of an S9 dropped to just $ 367.
This has led to older generation machines being dispersed to less established mining locations, such as Venezuela or Paraguay, where there is less regulatory stability but cheap electricity prices.
Juan José Pinto, co-founder of Doctor Miner, a mining company in Caracas, said that the Chinese ban "is a great opportunity." "So far we have been contacted by three different big Chinese miners to house around 7,000 machines," he said. "If we had the resources, we could host many more."
Pinto said his company pays about $ 0.01 per kWh for electricity, which means it can effectively use older, more energy-consuming machinery, such as the Antminer S9. Although these machines are rickety and more prone to breakdowns, Pinto and his team have found imaginative ways to keep them running.
"We have what we call 'the cemetery,' where we put miners who are not working, but they have parts that are," said Pinto. "If I have a machine with four broken pieces and another machine with six broken pieces, one and I hope to build a good miner."
Asunción-based Digital Assets is preparing to host 15,500 miners in the coming months, but faces competition from some Paraguayan locals who have started buying machines and mining independently.
And due to Venezuela's battered economy, cryptocurrency mining is a way for locals to increase their profits. "People mine at home with just one machine," Pinto said. “In other countries, there are some big ones with farms, here there are thousands of people with small farms. Earning an extra $ 100 a month makes a huge difference to them. "
