Among the preferred destinations in Texas, which miners see have several advantages conducive to resuming their mining operations.
China Cracks Down On Bitcoin Miners
As early as 2017, China already banned the trading of cryptocurrencies. However, they remain tolerant of bitcoin mining. This is the process by which individual computers try to solve complex algorithmic problems.
A successful solving of the problem gives the user Bitcoins as a reward. However, mining for bitcoins requires a lot of computing power. This is where the Chinese government’s patience began wearing thin.
Estimates place China as hosting around 70% of the world’s bitcoin miners. These miners cluster around four provinces: Xinjiang, Inner Mongolia, Sichuan, and Yunnan. Coal-fired plants service Xinjiang and Inner Mongolia’s energy requirements. Meanwhile, Sichuan and Yunnan are dependent on hydropower.
Once China realized it cannot fulfill its climate targets, province leaders blamed bitcoin miners for the surge in electricity consumption. Last May, the government called for sweeping measures against bitcoin mining and trading.
Last month, China’s State Council pledged to crack down on Bitcoin mining. The first province to implement stricter measures was Inner Mongolia. It banned Bitcoin mining and related activities last month.
Meanwhile, Xinjiang province authorities gave notice to bitcoin miners clustered in an industrial hub to shut down immediately.
The Great Mining Migration
China’s crackdown set off what crypto circles termed “the great mining migration” as bitcoin miners scramble to transfer operations to a more conducive location.
Texas became a new destination for consideration. Despite its recent issues with blackouts and power price hikes, Texas is home to some of the world’s lowest energy prices.
In addition, the state’s share of renewable energy sources continues to grow over time. Currently, wind power is contributing 20% of Texas’s total power supply.
Its deregulated power grid means that customers can choose which power provider to hook up with. On top of it all, many state officials are very crypto-friendly.
What Happens To Bitcoin?
Many financial analysts do not see the Chinese expulsion of bitcoin miners affecting bitcoin prices. The bitcoin mining system is not heavily dependent on location.
As long as steady power and internet connection are available, they can operate anywhere in the world. Already, some Chinese miners have explored new locations in Central Asia, such as Kazakhstan and Afghanistan.
In fact, Bitcoin rallied over the weekend to close at over $40,000. This is its highest price since its May collapse. China’s purge of bitcoin miners had nothing to do with the change in prices. Instead, an Elon Musk tweet apparently fueled the rally.
Watch the WSJ’s video special on the US vs China: The Battle for Bitcoin Mining Supremacy:Sorry, there are no polls available at the moment.
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