China has continued its crackdown on crypto mining and is telling more than half of the world’s bitcoin miners to hit the bricks.
Texas has become a popular destination for the flood of crypto miners who are fleeing China in the wake of increased regulations from government officials. China is concerned that bitcoin mining is having a negative effect on energy-rich regions of the country due to the massive power required for mining operations.
China moving toward a national ban on crypto mining
According to CNBC, while the global distribution of mining power numbers for 2021 hasn’t yet been tabulated, estimates show that up to 75% of the world’s bitcoin mining is done in China. The mining is concentrated in four main provinces: Inner Mongolia, Sichuan, Yunnan, and Xinjiang. Xinjiang and Inner Mongolia make use of the coal plants in the area while Sichuan and Yunnan utilize the region’s hydropower resources. Crypto mining in those regions along with Qinghai has already been asked by the government to cease operations.
To nobody’s surprise, these bans have already caused a lot of problems. One of those issues is the drop in global hash rate which puts a value on the bitcoin network’s global computing power. Earlier in 2021, China’s average monthly share of the global has rate was 65% according to the Cambridge Center for Alternative Finance. The report shows that Xinjiang alone made up for 36% of global consumption. While bitcoin has proven resilient to these hash rate drops thus far, the bans continue to come.
Another issue that everyone saw coming was the possibility that some miners would ignore the requests and continue to mine illegally. This has been a particularly persistent issue in Yunaan and the local authorities have threatened to cut power to those who continue to operate outside the law.
The Chinese bans are the result of government promises to become carbon-neutral by 2060.
Bitcoin miners finding a new home in Texas
For those law-abiding Chinese miners who wish to continue operating, a change of venue is required. Texas has become the go-to spot for these displaced mining operations with companies like Bitman, Blockcap, Argo Blockchain, and Great American Mining rumored to be just a few migrating to the Lone Star State. CNBC estimated that more than 50% of Chna’s total hash rate could eventually wind up in Texas.
According to Didar Bekbauov, the founder of Kazakh mine provider Xive, the exodus is already underway and it could be a huge game-changer for Texas. “Texas not only has the cheapest electricity in the U.S. but some of the cheapest in the globe.” He goes on to state that setting up a mining company is easy and just requires some capital. “If you have $30 million, $40 million, you can be a premier miner in the United States.”
Other advantages Texas provides are an expanding infrastructure based around renewable energy and politicians who support cryptocurrency. Some of those politicians, such as Governor Greg Abbott, have even gone on record supporting bitcoin mining. He believes it could be a valuable industry for the U.S.