Cryptocurrency ‘miners’ who deploy powerful computers that perform mathematical calculations essential to maintaining the blockchains that underpin cryptocurrencies in exchange for opportunities to earn free cryptocurrency are leaving China at a fast paced, reported The Wall Street Journal (WSJ).
The WSJ attributed the migration to other countries, especially North America, to new cryptocurrency fatigue expressed by Chinese authorities in May.
A “crackdown … on Bitcoin’s mining and trading behavior” was needed to “resolutely prevent the transmission of individual risks to the social realm,” according to a statement from Chinese Vice Premier Liu He and the Council of State of the People’s Republic of China. China.
Read more: China Steps Up Calls For Crypto Regulation; Bitcoin collapses
Chinese regulators have never been particularly friendly towards cryptocurrencies, but the country has proven popular with miners because electricity is relatively cheap in some areas, the WSJ reported. Miners’ computers use enormous amounts of electricity to perform the complex calculations required of them.
The Cambridge Bitcoin Electricity Consumption Index produced by researchers at Cambridge University accounts for around 46% of mining transactions for the dominant Bitcoin cryptocurrency in China in the spring of 2021. The United States, on the other hand, was home to about 17% of mining activity. Canada hosted only 3% of mining transactions.
As companies move their computers, which can cost up to $ 12,000 each, out of China as quickly as possible, the fragility of the machines and the global shipping safeguards caused by the pandemic are creating delays, according to the WSJ. Computers imported from China to the United States are also subject to tariffs of 25%.
“That’s a pretty big financial impact on miners in China,” Fred Thiel, managing director of Marathon Digital Holdings, a Las Vegas-based cryptocurrency mining company, told the WSJ. “It’s like GM has to shut down a factory and build a new one somewhere else.”