The Bitcoin mining ban started a fire sale on Chinese miners, FT investigation reveals where they went
The world of Bitcoin mining went into a frenzy earlier this year when China banned miners and forced them to take their rigs out of the country. While we thought that the US was one of the biggest beneficiaries of the move, Texas electricity prices and all, a new Financial Times research tells us exactly where some of the two million Bitcoin mining rigs went when they got turned off in China. It turns out that the US got a little less than Kazakhstan - 87,200 vs 87,849 - while the lion's share of 205,000 machines went to Russia. Canada is the fourth most preferred destination for cryptocurrency mining, followed by countries like Paraguay and Venezuela with lax rules and cheap electricity.
The fire sale that the Chinese Bitcoin miners got forced into led to a severe drop in the price of one popular rig - the Antminer S19 - which fell 42% in just a few short months. Still, over 700,000 machines have been sitting in storage in China, turned off since the enaction. Those are mainly older, cheaper models that ultimately made the bulk of the shipments to Venezuela and Paraguay. For Juan Jose Pinto who founded the Bitcoin mining firm Doctor Miner in Caracas, the Chinese ban has been a boon given Venezuela's one cent per kWh electricity prices:
We’ve been contacted by three different big Chinese miners so far to host around 7,000 machines. If we had the resources we could host a lot more. We have what we call ‘the cemetery’, where we put miners that aren’t working, but have parts which are. If I have one machine with four broken parts and another machine with six broken parts, I unite them and hopefully build one good miner.
Moreover, Bitcoin mining turned out to be a poverty alleviation strategy for sanction-stricken Venezuelans, an opportunity that is not available in more developed destinations for the Chinese mining rigs, according to Mr. Pinto:
People mine in their houses with just one machine. In other countries, there are a few big guys with farms, here there are thousands of people with small farms. Making $100 extra per month makes a huge difference for them.