Government Banned, Chinese Bitcoin Miners Hunt Cold Country Low Electricity Cost

Bitcoin miners from China, are now starting to move to other countries. (photo: Brian Wangenheim/unsplash)

JAKARTA - Big bitcoin miners who fled China to escape a state crackdown will take months to get up and running again.

This week data centers in Texas to Siberia began scrambling to secure space and power for them, while many small players may struggle to move at all.

Bitcoins are created or "mined" usually by high-powered computers in data centers in various parts of the world. They compete to solve complex mathematical puzzles in an electricity-intensive process.

China's bit coin mining industry, which accounts for as much as 70% of the world's capacity, fell apart after the State Council, or cabinet, announced a crackdown on bitcoin trading and mining in late May targeting financial risks.

Bitcoin miners in China are now closing or looking to move. They are looking for an authority that is tolerant of bitcoin miners, low temperatures to keep machines from overheating and low electricity costs.

According to estimates from researchers at the University of Cambridge, the power consumed by bitcoin mining globally in early July is equivalent to an annual consumption of almost as much as Austria's electricity consumption. Even after falling 50% since May.

This move will trigger the emergence of new mining centers in the long term. For now, however, miners face limited data center capacity overseas and logistical challenges.

"None of these people were online in June or July," said Thomas Heller, head of Compass Mining's business. He explains miners need to collect machines scattered all over China, test, clean and package them, ship them overseas, and pass customs. before reinstalling.

According to miners, logistics supplies will be more difficult for smaller Chinese miners with less cash to pay for shipping costs. Especially for miners who are also not used to operating overseas, so they may find it difficult to find a hosting center they can trust.

Kevin Zhang, vice president for business development at US-based Foundry, a mining, financing and crypto advisory firm, said China's crackdown could drive geographic diversification in the long term.

"Many countries that were previously untapped by bitcoin miners, such as in Southeast Asia, South America or Australia will be incentivized to use renewable energy for stranded miners," he said, "Whereas this energy market was not needed before."

Under these conditions, Indonesia can become a new destination for miners. It's just that the high temperatures in this country make miners have to spend extra money to buy air conditioning machines, air conditioners. This makes the need for electrical power for the air conditioner becomes an additional burden.