Three Chinese provinces have already banned cryptocurrency mining. How this will affect the crypto-mining industry in the long term and which countries are the most promising for companies mining digital assets right now
Cryptocurrency mining has already been banned at the state level in three Chinese provinces. This has already been announced by the authorities of Yunnan, Qinghai and Xinjiang provinces. In this regard, major miners have already begun to leave China and move equipment to other countries. Against this background, the bitcoin network hash rate declined to 99 Eh/s in early June. As of June 15 19:50 MSK, the hash rate of the main cryptocurrency has partially recovered and is 130 Eh/s, according to the Bitinfocharts service. RBC-Crypto experts explained how the cryptocurrency mining sphere is transforming based on recent events.
Relocation trend
It is premature to talk about the complete exodus of miners from China, says co-founder of data center LAZM Roman Nekrasov. According to him, some provinces have not yet introduced a ban on cryptocurrency mining. For example, in one of the main hubs of cryptomining - Sichuan province - a ban is expected from September, says the expert.
But according to Roman Nekrasov, there is still a trend of relocation among miners, as companies are now considering moving equipment to other Asian countries, such as Kazakhstan. Some mining companies are considering relocating to the United States and Canada, where hydropower is well developed, the expert noted.
Impact on mining
The effect of such bans and restrictions in the short term is negative, because any attack on bitcoin miners leads to concerns about the stability of the network, said Roman Nekrasov. However, according to him, it can lead to positive consequences in a few years, such as an increase in decentralization of the network.
For any system, such restrictions are turbulence and uncertainty, says Nikita Soshnikov, director of cryptocurrency exchange service Alfacash. He believes that the owners of mining enterprises, who are forced in a hurry to look for places to relocate or decide to close the farm, are in a very difficult situation.
The only positive thing the expert sees in China's ban on mining is another demonstration that bitcoin cannot be destroyed by any restrictions.
"The system is designed decentralized enough to withstand such attacks. I cannot call the decision of the Chinese authorities anything other than an attack," Nikita Soshnikov explained.
Promising countries for relocation
The U.S. and Canada are considered the most promising countries for the relocation among cryptocurrency mining companies, said Roman Nekrasov. According to him, these countries already have a fairly clear regulation and taxation, but energy prices can be much higher than what miners are used to in China.
Also miners may consider Brazil, Kazakhstan and Tajikistan, but these countries lack clear regulation, so small companies that are willing to work in a gray area migrate there, explained the co-founder of the data center LAZM.
According to many parameters Russia is suitable for the relocation of miners, but so far the interest in the Russian sites of the cryptocurrency mining companies are not experiencing, explained Roman Nekrasov. In his opinion, the Chinese are not ready to risk business because of the unfriendly investment climate and non-transparent crypto-regulation.
Nikita Soshnikov does not rule out that some of the miners from China may move to Georgia. The expert reminded that Chinese investors already have mining facilities in the economic zone near Tbilisi. Cryptocurrency regulation in Georgia is very friendly, the director of cryptocurrency exchange service Alfacash added.
Green Energy
The transition of cryptocurrency mining to green energy may increase the attractiveness of digital assets in the long term, said the co-founder of data center LAZM. According to him, it will happen anyway, even if not directly, then through tweets from Tesla and SpaceX CEO Ilon Musk. When the businessman once again starts openly supporting bitcoin, rather than attacking the coin, his multimillion army of fans will rush to buy the cryptocurrency and its quotations will go up, Roman Nekrasov is sure.
"Musk has a very populist approach, but as we can see, it works," the expert added.
On June 14, Ilon Musk said that Tesla will once again start accepting bitcoin for payment after most of the miners will use renewable energy sources. After the businessman's statement, the main cryptocurrency rose by 12% and exceeded the $40,000 mark.
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