Chinese Miners Exiled to Russia, Kyrgyzstan, Mongolia, Anywhere with Cheap Electricity
China, a good fit for cryptocurrency mining with cheap electricity and land available in remote areas, is now doing its best to drive cryptocurrency out of its territory after escalated government crackdown on cryptos and mining since last September. It is no longer the best place to mine.
As recent reports unveiled that bitcoin mining business is set to be phased out in Xinjiang and local governments along the Yangtze River have begun to regulate small hydropower plants, home to over 40,000 miners, these most favored places like Xinjiang and Sichuan are losing attraction for domestic miners as a result of policy instability. Chinese miners are migrating like nomad to anywhere with cheap electricity and favorable policy.
In our serial stories tracking Chinese miners, these unwanted miners are crossing the border to find their new home with varied troubles and sufferings. Large mines move their operations overseas with Canada, the U.S., and Iceland among their top candidates, whilst most small and medium-sized ones turn to Thailand, Cambodia and Vietnam in Southeast Asia for geographical proximity, or simply, shut down their mining business.
“My first choice is Kyrgyzstan (a country in central Asia). Policies there on crypto mining are friendly at present,” said Wu Di, a miner who has already had three mining farms there, of which two are reserved as precautions against future trouble if his mines in China are forced to be shut down one day.
Neighboring countries with cheap electricity are all among their candidates. A growing number of mining farms in Russia are soliciting Chinese partners.
“Partnership wanted here in Russia Federation mining farm. We offer abundant electricity at 0.3-0.39 yuan for KWh with favorable climate, and buy insurance for your equipment.” an ad post appeared May 22 on Bitcointalk.org.
Geographical proximity helps to streamline logistics and reduce shipping costs for mining equipment that needs to be relocated.
“$3.5 per kilogram by land transportation, and premium is 2% of the value of the equipment.” Alex, a Chinese miner said.
Alex’s mining farm, located in Chelyabinsk Russia, can hold thousands of mining machines
“Bitcoin belongs to the whole world. We’d like to go wherever mining cost is cheaper. Different countries currently have varied attitudes toward bitcoin, in this context, large mines won’t bet all on one country. ” Alex said.
All-season low temperature and cheap electricity lured Alex to mine in Chelyabinsk.
“It is at the eastern foot of the Ural Mountains with year-round temperature below 25 degree and snow begins in October (which is perfect for those fast-running mining machines). I’ve signed contracts with local power plant and directly pulled an electric wire from there, 0.25 yuan (US$0.04) for KWh.“
Thanks to soviet-era heavy industry, Russia has a glut of cheap electricity. Sergei Repetyuk, head of economics at Russia’s Institute of Economic and Natural Monopoly, once told media that even at peak time of energy consumption, more than 40 per cent of Russia’s energy output remains unused.
According to local news released today, the Leningrad region is preparing to launch Russia’s largest data center for mining.
Another neighboring country, Mongolia, is also trying to woo Chinese miners by offering abundant wind power at favorable prices. Earlier this year, top officials in Mongolia have met several Chinese bigwigs in the crypto space to welcome them to mine in the country, according to people familiar with the matter.
Countries in Latin America and Southeast Asia with cheap power sources are also reaching out for Chinese miners.
Everyone wants to have a share of its hashing power, which accounts for some 70% of the world’s total. However, it seems China itself is stepping out of this crypto mining sector.
Sometimes relocation in other countries cannot secure a better future.
Some self-claimed insiders say they will offer help to conduct legal business for miners in Russia, but it may turn out to be scams and electricity cost figures are probably phony. A miner named Huang Du said he found he was cheated after paying the deposit for a mining farm.
“Work only with the locals, trusted locals,” Alex said, “my wife is Russian. Her family there could pull some strings to find me good partnership. My partner could handle most work there, saving me a lot of work.”
As for local policies, Alex said “there’s no outright ban neither supporting policies. If you can find partners there, they can handle all these. The circumstance here, at least, is better than that in China.”