Due to China’s clampdown on bitcoin mining, Bitmain suspended sales of mining rigs, the exodus of miners, and a drop in the hash rate.
Bloomberg reports that Bitmain Technologies, the world’s largest manufacturer of bitcoin mining rigs, has stopped selling equipment in global markets in order to help support the secondhand market in China.
This recent price drop is the result of the recent dip in new mining equipment. As of April, the most powerful mining rigs in China have been 75% cheaper, as Chinese miners stopped mining bitcoin after the government instituted a regulatory crackdown.
Instead of having to deal with higher selling prices after China banned sales, Bitmain claims it can help miners targeted by the Chinese government to get better prices when they exit the mining industry. And over time, the mining rig maker giant may also benefit from an increased demand for new rigs because of the decreased supply.
The country’s state council announced earlier this month that it would be implementing stricter measures against bitcoin mining and trading. After that, government entities such as local governments have tried to get rid of bitcoin miners by passing laws and ordering inspections of facilities solely powered by fossil fuels.
Additionally, provinces with renewable energy resources have also become targets for bitcoin mining operations. As in other provinces, miners in Sichuan have also become victims of the recent crackdown. Once built by the government to attract heavy energy industries to use excess hydropower during the rainy seasons, the region’s hydropower grid has now been taken over by bitcoin mining farms.
While the NSIDER claims “a great ASIC exodus” is underway
As a result of China’s move to block the country’s mining operations, companies have reconsidered their business strategies. There are numerous businesses using BIT Mining’s overseas deployment strategy, including, for instance, the mining operation in Vietnam. In order to start using BTC.com’s mining pool, a location in Kazakhstan has already been selected and a shipment of mining equipment has already been dispatched.
BIT Mining’s announcement is notable because it represents an upcoming trend in hash rate transfer away from China. Kevin Zhang, the vice president of BIT Mining, stated that the move represents an impending trend where hash rate will be shifted away from China, which he refers to as the “great ASIC exodus.”
Based on Zhang’s assertions, Chinese miners believe that over 70% of China’s mining capacity has been rendered obsolete. The prediction is that as of the end of the month, almost 90% of the country’s hash rate will be off-grid.
Zhang tweeted: “In the most extreme cases, power plant/station operators in Kangding, Sich with the mining facility they have installed on their system have told their employees to remove all infrastructure (with the exception of low-medium voltage and racks/shelving) within 1-2 weeks.”
Impacts on the Bitcoin hash rate
Chinese bitcoin miners rushing to leave the country causes the network hash rate to drop until they can return to their overseas locations with their mining equipment. While the long-term trend of miners moving out of China had started, these temporary shutdown orders had the ability to inflict some damage. The Bitcoin network’s total hash rate has fallen by more than 40% in the short time span of 30 days.
Even if the hash rate drops, the network’s security is not compromised. Let’s take an example like Nic Carter, the co-founder of Coin Metrics, who released a video explaining China’s ban on bitcoin mining. In speaking about the effect a lost hash rate would have on network security, Carter asserted that the loss of hash rate would not negatively impact the network and Bitcoin’s carbon emissions would be reduced because miners would relocate to greener power plants abroad.
