Manufacturers of machines that are used for ‘mining’ cryptocurrencies, such as Bitcoin, are rapidly shifting their focus from China to Central Asia and North America, as a result of a crackdown by Beijing on cryptocurrencies. Due to this crackdown in the country, the future for Chinese clients has become rather uncertain. The central government in China vowed to clamp down on Bitcoin trading and mining on Friday, which pushed some miners to halt part or all of their operations. This is undoubtedly worrying because more than half of the global crypto supply is contributed by the country.
The manufacturers of the equipment used by miners, many of which are Chinese, have said that they are now exploring other areas of growth. Ebang International, based in Hangzhou, said that even if domestic sales were to go down completely, its mining machines would still remain in short supply overseas. There will be a further softening in the impact by the fact that domestic customers will be moving overseas for the purpose of mining cryptocurrencies. Emphasizing the trend, BIT Mining Ltd, which is based in Shenzhen issued a statement on Monday in which it disclosed a deal with a company based in Kazakhstan.
This involves a joint investment in the central Asian country for a crypto mining data center. Specially designed and increasingly powerful computer equipment is used by Bitcoin miners, which is referred to as ‘rigs’. This is used for verifying Bitcoin transactions, a process that helps produce newly minted Bitcoins. China has a big energy-hungry business, even though the market share of the country has been declining steadily for years because of regulatory uncertainty. Innosilicon Technology is a crypto mining rig manufacturer and a chip designer. The company’s vice president, Alex Ao said that foreign miners will end up benefitting is China’s crypto computing power is lost quickly.
Places like Central Asia and North America offer advantages in terms of policy support and power supply and according to Ao, this will push more Chinese miners to move abroad. Another Chinese manufacturer of mining machines is Canaan Inc. and its senior vice president, Edward Lu said that they were also exploring similar markets. He said that the strategy should be to focus on developing markets like North Europe, Canada, and Kazakhstan that have cheap and abundant energy resources, along with predictable and clear regulations.
On Tuesday, draft rules for rooting out the business were published by the northern region of Inner Mongolia in China, which is considered a major center for mining, other similar mining centers haven’t yet issued their own rules. Experts said that moving their mining operations to other areas is the only Plan B that miners have and the exodus can be made smoothly by the biggest mining operators in China. Last year, Kazakhstan had clarified its rules regarding crypto mining and it is hoping that this will help an economy dominated by oil. But, there are miners who are quite angry at having to move and believe that officials shouldn’t kill an entire industry with just a few words.