- Chinese bitcoin miners hit by state crackdown on financial risks
- Bitcoin miners seek data centres with cheap power, cool weather
- Geographical diversification seen likely after short-term disruptions
HONG KONG/SHANGHAI, July 7 (Reuters) – Large bitcoin miners fleeing China to escape a state crackdown will take many months to start operating again, as data centres from Texas to Siberia scramble to secure space and power for them, while many smaller players may struggle to move at all.
Bitcoin is created or “mined” by high-powered computers usually at data centres in different parts of the world, competing to solve complex mathematical puzzles in a process that makes intensive use of electricity.
The industry in China, which accounted for as much as 70% of the world’s capacity, is in disarray after the State Council, or cabinet, announced a crackdown on bitcoin trading and mining in late May targeting financial risks. read more
Miners in China are now shutting down or looking to move out, seeking tolerant authorities, low temperatures lest machines overheat and cheap electricity – ideally surplus power from hydro plants or oil fields that would be wasted.
The power consumed by bitcoin mining globally in early July equates to an annual consumption almost as large as Austria’s, according to estimates from researchers at the University of Cambridge, even after falling 50% since May.
While the move is set to fuel the emergence of new mining centres in the longer term, for now the miners are running into limited data centre capacity overseas and logistical challenges.
“None of these guys are getting online in June or July,” said Thomas Heller, chief business officer of Compass Mining, explaining miners needed to collect machines scattered around China, test, clean and pack them, ship them abroad, and get through customs before installation.
The logistics are harder for smaller Chinese miners with less cash on hand to pay for shipping, and who are also unfamiliar with operating overseas so may struggle to find hosting centres they can trust, miners say.
Nonetheless Compute North, which runs data centres hosting bitcoin miners in Texas, Nebraska and South Dakota, for example, is accelerating expansion plans slated for next year to meet “a massive influx of inquiries” from China.
“There’s no doubt in my mind that we’re going to see a lot of computers sitting in warehouses for the next six, nine, 12 months as the infrastructure catches up,” said Compute North Chief Executive Dave Perrill.
“We are targeting the first and second quarter of 2022 for large scale deployments … (but) it’s not a simple switch, it takes a lot of complex engineering, procurement and construction.”
Moscow-based BitRiver, which operates data centres in Siberia hosting bitcoin miners, has accelerated plans to build new facilities and expand existing ones to meet some of the demand from those leaving China.
BitRiver estimates demand for space in its facilities will rise to 1.5 million mining…