Cryptocurrency “miners” who deploy powerful computers that perform mathematical calculations essential to maintaining the blockchains that underpin cryptocurrencies in return for opportunities to earn free cryptocurrency are leaving China at a fast clip, The Wall Street Journal (WSJ) reported.
WSJ attributed the migration to other countries, especially in North America, by new weariness of cryptocurrencies expressed by Chinese authorities in May.
A “crack down… on Bitcoin mining and trading behavior” was necessary to “resolutely prevent the transmission of individual risks to the social field,” according to a statement from Chinese Vice Premier Liu He and the State Council of the People’s Republic of China.
Chinese regulators never were particularly friendly toward cryptocurrencies, but the country proved popular for miners because electricity is relatively cheap in some regions, WSJ reported. Miners’ computers use huge amounts of electricity to conduct the complex calculations required of them.
The Cambridge Bitcoin Electricity Consumption Index produced by Researchers at Cambridge University has about 46 percent of mining transactions for the dominant Bitcoin cryptocurrency taking place in China as of spring 2021. The United States, by contrast, was home to about 17 percent of mining activity. Canada hosted just 3 percent of mining transactions.
While companies are moving their computers, which can cost as much as $12,000 each, out of China as fast as they can, the fragility of the machines and the global shipping backups caused by the pandemic are creating delays, according to WSJ. Computers coming into the U.S. from China also carry 25 percent tariffs.
“It’s a pretty big financial impact on the miners in China,” Fred Thiel, chief executive of Marathon Digital Holdings, a crypto-mining company based in Las Vegas told WSJ. “It’s kind of like GM having to shut down a plant and build a new one elsewhere.”