Is it the end of Crypto Mining?
For the past few months, cryptocurrencies have been on a roller coaster journey across tumultuous waters. There has been Elon Musk, who loved them at first, doubted them, and then was accused of manipulating them. Then there’s China, which on May 18 made it illegal for financial institutions to facilitate cryptocurrency transactions, including conducting business or delivering services using digital currencies.
Just a few months ago, China was home to more than half of the world’s bitcoin miners, but along with the new restrictions, that is about to change.
Bitcoin miners are looking for new locations to establish their operations as Beijing continues to issue directives banning the practice.
Kazakhstan, China’s neighbor, appears to be one of the most likely locations, given the country’s laid-back attitude toward construction and coal resources, which provide a cheap source of electricity. Miners are also looking overseas as part of the “great mining migration,” as crypto industry observers have dubbed it. According to a CNBC article, one of the frequently considered choices is North America, particularly Texas.
There are several compelling reasons for this. Texas has plenty of solar and wind energy: Texas is now the USA’s top in wind-powered energy generation, accounting for more than 30% of total generation. On the other hand, Texas’ share of renewables is increasing with time. Texas also offers some of the lowest energy prices in the world.
Furthermore, its market is mostly unregulated, and Texas politicians and bankers are pro-crypto. All of this contributes to the state’s attractiveness to miners.
However, there are certain disadvantages, such as the fact that constructing the infrastructure required to host miners will most likely take six to nine months. Logistics may also be difficult because of the shortage of shipping containers brought on by the COVID-19 epidemic.
There’s also the question of how dependable Texas’ power system is in the winter, considering that it isn’t winter-proof, and freezing temperatures brought on by winter storm Uri in February 2021 left nearly 3 million people in Texas without power..
As miners look for a new home, all of these processes are expected to take a long period. The miners will have to either move their equipment out of China or liquidate their assets and start over elsewhere.
According to CNBC, as miners rush to relocate, the hash rate, which measures the processing power of the Bitcoin network, may “fall offline and stay offline” since there isn’t enough mining capacity in the world to absorb this relocation.