The Chinese Government's Ban On Geographical Diversification Of Bitcoin Mining

The United States could be a new destination for Bitcoin miners from China. (photo: Ewan Kennedy)

JAKARTA - The Chinese government's strict ban on bitcoin mining activities in the country has made data centers and computer services in several countries race to take advantage of the planned move of bitcoin miners from China.

Compute North, which runs a data center hosting bitcoin miners in Texas, Nebraska and South Dakota, for example, is accelerating expansion plans slated for next year to meet a "massive influx" from China.

"There's no doubt in my mind that we're going to see a lot of computers stored in warehouses over the next six, nine, 12 months as infrastructure catches up," said Compute North Chief Executive Dave Perrill.

"We are targeting the first and second quarters of 2022 for large-scale deployments ... (but) this is not a simple transition, it requires a lot of complex engineering, procurement and construction," he added.

Moscow-based BitRiver, which operates a data center in Siberia and hosts bitcoin miners, has accelerated plans to build new facilities and expand existing facilities to meet some of the demands from miners leaving China.

BitRiver estimates demand for space at its facilities will increase to 1.5 million mining machines requiring up to 2.5 gigawatts of power. This is much larger than the current 125 megawatt facilities in its three data centers.

"We know companies are leaving China because they are coming straight to us," said BitRiver spokesman Roman Zabuga.

According to estimates by Adam James, senior editor at OKEx Insights, the Chinese government's ban on bitcoin mining could take up to 90% of all mining in the country offline. Some miners even threw away machines in desperation.

Didar Bekbauov, co-founder of Kazakhstan-based hosting center Hive Mining, receives about four inquiries daily from potential clients from China, asking about pricing, availability and regulations. "Kazakhstan doesn't have enough ready-to-use space in the data center to accommodate all those miners," he said.

The commotion in Chinese bitcoin mining, is not bad news for everyone. Some miners outside China have actually benefited from bitcoin mining activities that have disappeared from China.

“Our revenue automatically increased after several hundred thousand of bitcoin mining machines suddenly went offline in China,” said Dale Irwin, president of Greenidge Generation, a New York-based bitcoin mining and power generation facility.

The algorithms that govern bitcoin keep production at a regular pace, adjusting approximately every two weeks to require more computing power to generate bitcoins if many machines are mining, or less if less.

Since China's crackdown, bitcoin mining computing power hit a six-month low.