China’s ban on cryptocurrency mining has forced bitcoin entrepreneurs to flee abroad.
many now turn to TexasUnited States of America, which is fast becoming the cryptocurrency capital of the world.
When China announced crackdown on crypto mining and bitcoin trading in May, Kevin Pan, chief executive officer Chinese cryptocurrency mining company PoolinHe took off to leave the country the next day.
“We decided to move on once and for all and forever. We will not be back,” Pan told the BBC.
Based in Hong Kong, Poolin is the second largest bitcoin mining network in the world, with most of its operations in China. The country was home to about 70% of the world’s bitcoin mining power, until this action caused the price of bitcoin to plummet and shut down miners.
Now China’s “Bitcoin refugees” are struggling to find a new home, whether in neighboring Kazakhstan, Russia or North America; Because for bitcoin miners, time is literally money.
“We (bitcoin miners) had to find a new location for the machines,” says Alejandro de la Torre, Poolin’s vice president. “Every minute the machine is turned off, it doesn’t make money.”
in what “The Great Mining Migration”Poolin executives are among the many bitcoin miners that have recently landed in such iconic locations as America’s Wild West: Austin, Texas.
Bitcoin is a digital currency without a physical form. They exist and are only exchanged online.
They are created when a computer “extracts” money by solving a set of complex mathematical programs, and this is how the bitcoin “miners” running the computer earn the currency.
This requires a lot of energy.
Being a new form of money that crosses national borders, it also creates a lot of confusion and the potential to conflict with government regulations.
This Is Why Two Things Bitcoin Entrepreneurs Value Cheap electricity and a loose regulatory environment.
And the state of Texas is a perfect fit.
New limits for bitcoin mining
For Pan, Texas felt like home almost immediately.
A few days after his arrival, they gave him an AR-15 rifle; And he says he may one day use it to hunt pigs from a helicopter.
While Texas shooting ranges and barbecues provide an entertaining reception, legal protection for businesses is the biggest attraction for bitcoin miners.
“What happened to us in China will not happen in America,” says de la Torre.
Texas Governor Greg Abbott has been a supporter of cryptocurrencies.
“It is happening! Texas will be the leader in cryptocurrencies,” he posted on Twitter in June.
In the same month, Texas became the second US state after Wyoming to recognize blockchain and cryptocurrency in its business law, To pave the way for the conduct of businesses in the state.
Many Chinese mining companies have sought stability and opportunity in Texas.
Bit Mining Company, based in Shenzhen, plans to invest $26 million to build a data center in the state; While Bitmain is expanding its facilities in Rockdale, Texas, in Beijing.
This small town of about 5,600 inhabitants was once one of the largest aluminum plants in the world. And now it is emerging as the next global bitcoin mining hub.
There may be another underlying connection between the industry and Texas, as de la Torre says bitcoin miner and Texan. They share similar values.
“Texans take their freedoms and rights very seriously, as do Texans. bitcoiners“.
Experts believe that China’s action on bitcoin was driven by greater control over financial markets. And it could be a boon for America.
“Migration benefits the US in terms of acquiring talent and fostering an innovation ecosystem,” says Kevin DeSouza, a business professor at Queensland University of Technology who researches digital currency policy in China.
In return, bitcoin miners get Access to a thriving and innovative community as well as more diverse sources of capitalAccording to Desouza.
political and energy risk
In addition to a stable regulatory environment, the energy-hungry industry is looking for cheap electricity in Texas.
Here are some of the cheapest energy prices in Texas DWorld Because of its regulated electrical grid.
Consumers enjoy a greater choice of electricity providers, which encourages providers to reduce prices in order to remain competitive.
During the peak of electricity demand, bitcoin farms can also sell unused electricity to the grid.
Although El Salvador is about be the first country In the adoption of bitcoin as the national currency, bitcoin miners prefer the US due to its well-developed electrical infrastructure, says de la Torre.
But some analysts have warned that the “Great Mining Migration” could have dire consequences, as cities and towns struggle to meet the huge demand for energy.
In February, the blackouts that followed Deadly blizzard left millions of Texas homes and businesses without electricity for days. More than 200 people died.
During the power outage, the bitcoin farm was compensated for being offline.
Investigations of Chinese companies in the US may also draw more attention to these newcomers than mining.
Texas recently passed a law that prevents hostile foreign actors“Access critical infrastructure, including your energy network.
The new law was reportedly inspired by a Chinese billionaire’s plan to build a wind farm in southwest Texas. But critics allege that the project could be used to hack the state’s power grid and gather intelligence from a nearby US military base.
Professor D’Souza says that while access to the electricity grid is unlikely to be a problem for bitcoin miners in the short term, political risks will continue to develop.
However, bitcoin miners in China seem to be missing something: Cheap labor and fast construction.
According to Pan, while it takes up to five months to build a new bitcoin farm in China, it could take up to 18 months in Texas.
Global shipping prices have also skyrocketed during the pandemic, causing significantly More expensive to ship miners from China to the US
Despite the costly and time-consuming effort, Pan says his company is committed to establishing itself in Texas.
“It is a free land, and many of these” bitcoiners They are here,” he says. “So we felt like: ‘Wow, family reunion.
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