“The Death Of China’s Bitcoin Mining Industry,” 7 Takeaways From The Article
03 Agosto 2021 - 6:17AM
NEWSBTC
Did China make the mistake of a lifetime by banning Bitcoin mining
or do they have a secret plan? That’s the question the whole
Bitcoin ecosystem is struggling to answer. And today, we got
another piece of the puzzle. In the article titled “It’s Over, It’s
All Over” – The Death Of China’s Bitcoin Mining Industry,” a
pseudonymous manager by the name of Ye Lang tells his story. And in
his tale, a bigger story is reflected. Related Reading | Bitcoin
Hash Rate Goes On Death Spiral Post China’s Crackdown On Miners On
May 21st, in a “meeting of the State Council’s Financial Stability
and Development Committee, a top-level economic and financial
policymaking body chaired by Vice Premier Liu He,” China decided to
ban Bitcoin mining. Less than a month later, on June 19th, the
Sichuan government ordered “the closure of Ye’s facility, along
with 25 other cryptocurrency mining projects in the province.” That
story started like this: Ye decided to jump on the Bitcoin mining
bandwagon in 2018 when he closed down the majority of his internet
café business, mortgaged his apartment in Anqing, Anhui province,
borrowed money from relatives and left his wife and daughters to
move to Sichuan What can we learn from Ye’s first-hand experience?
1.- It Only Takes 80 Employees To Manage An 80,000 Bitcoin Miners
Operation At the peak of the facility’s Bitcoin mining operations,
Ye was in charge of 80 employees and a total of 80,000 mining
machines, with the entire project estimated to be earning more than
90 million yuan ($14 million) during the peak six months when
Sichuan’s rivers are glutted and electricity is especially cheap
The numbers are staggering. Evidently, supersizing mining
operations offers a huge advantage. Especially in regions with
cheap electricity. 2.- Clean An Renewable Energy Didn’t Save
Sichuan The fact that the electricity for crypto mining in Sichuan
came from clean hydropower meant that many thought the province
would be a safe haven for Bitcoin miners. As pressure on local
governments to cut carbon emissions mounts, projects were
successfully shuttered in some other provincial-level regions —
such as Xinjiang and Inner Mongolia — where the mining was chiefly
fueled by coal. The only thing we can know for sure about the
Chinese government’s plan is this: the environment is not on their
radar. They’re closing these mining operations for other reasons
altogether. 3.- Bitcoin’s Energy Use Is Not The Issue The
fact that the Sichuan crackdown was about to hit, confirms what
everyone has known: the “justification” for cracking down bitcoin
miners, the cold shoulder on bitcoin by social luminaries (such as
Elon Musk) and the use of the ESG bullshit excuse that crypto is
“dirty” have always been merely a socially-acceptable smoke screen
for a regulatory crackdown on cryptos when they become too big.
Enough said. ZeroHedge nailed it on the head. It’s also worth
noting that Nic Carter also nailed it on the head regarding China’s
energy mix when it came to Bitcoin mining. 4.- Individuals Can
Still Mine Bitcoin In China Despite the government’s hardline
approach, Ye is determined to carry on: “This industry is extremely
volatile. High emotions and stress are involved, but that’s also
its appeal. Companies are banned from mining Bitcoin, but
individuals aren’t,” Ye said, adding that he plans to turn around
his operation by purchasing old equipment and downsizing. The
Chinese government was only worried about industrial-sized private
mining operations. The question is why. What are they planning?
Nobody seems to have figured that out. 5.- One Owner Mined Between
70 and 80 Bitcoins Per Day Another character enters the scene, the
owner of the mine. We’ll call him Liu Weimin, also a
pseudonym. Liu owned more than 10 Bitcoin mining farms, which
industry insiders estimated accounted for one-eighth of the total
electricity consumed by all Bitcoin mines in the province. During
peak seasons, Liu said his farms could mine 70 to 80 Bitcoins every
day. About 900 Bitcoins are issued each day globally, according to
an industry information platform. Almost 10% of the total daily
issuance seems like too much for a single individual. The Bitcoin
world scored a huge win with the Chinese ban on Bitcoin
mining. BTC price chart on Bitstamp | Source: BTC/USD on
TradingView.com 6.- A Industrial-Sized Mine Can Break Even In A
Year “Mining farms are somewhat like conventional crop farms. No
matter how the Bitcoin market changes, the mining process remains.
Opening such facilities is a relatively stable investment, and I
can generally break even in a year,” Liu told Caixin. There are few
businesses in the world that can give you that ROI. At least among
the legal ones. Food for thought for the young entrepreneurs out
there. Related Reading | How China Bitcoin FUD Is Lowering The Cost
To Produce BTC 7.- Bitcoin Mining Used To Be A Respected Business
In China Thanks to the Sichuan government’s mining-friendly
policies back then, Liu’s business continued to flourish for the
past three years. He quickly made a name for himself, and was a
frequent guest at government events and meetings, where he was
recognized as one of many model energy consumers who had helped
lift locals out of poverty. From a respected businessman to a
social pariah. It would be easy to feel sorry for Liu if he wasn’t
on his way to restore his business. Following the government’s May
21 crackdown announcement, he arranged teams of employees to scout
for new venues in North America and Kazakhstan. In mid-June, his
company bought an oilfield in Canada that could potentially provide
fuel for his Bitcoin mining business. So, why did China banned
Bitcoin mining? We have no idea. We know, however, that their hold
over the industry was already waning and that entrepreneurs are
selling small hydropower stations. And we have both Ye and Liu’s
stories. Is the picture clearer? Are we closer to the real deal?
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