Under heavy pressure: China's mining pool computing power has dropped by more than 20%, and mining machine migration is imminent

After the Inner Mongolia Development and Reform Commission issued the "Eight Measures on Resolutely Crack Down on and Punish Virtual Currency "Mining" Behavior (Draft for Comments)" on May 25, provinces and cities such as Xinjiang and Qinghai gradually followed up and introduced mining supervision policies.

On June 3, the Baotou City Energy Consumption Dual Control Emergency Command Office recently issued the "Notice on Accepting Petitions and Reports on Problems of Virtual Currency "Mining" Enterprises and Individuals", stating that it will fully accept petitions and reports on problems of virtual currency "mining" enterprises and individuals. The scope of reporting includes virtual currency "mining" enterprises (including other hidden forms of "mining" enterprises and entities), individuals; virtual currency "mining" enterprises and individuals who disguise themselves as data centers to enjoy preferential policies in terms of taxation, land, electricity prices, etc.

On June 9, the Development and Reform Commission of Changji Hui Autonomous Prefecture in Xinjiang issued a notice on the immediate suspension of production and rectification of companies engaged in virtual currency mining, requiring the Management Committee of the Xinjiang Jungar Development Zone to immediately order all companies engaged in virtual currency mining to suspend production and rectify before 14:00 on June 9 , and report the relevant suspension and rectification situation to the Development and Reform Commission.

On the same day, the Qinghai Provincial Department of Industry and Information Technology issued a notice on the comprehensive closure of virtual currency "mining" projects, requiring all regions to clean up and rectify the relevant virtual currency "mining" activities: 1. It is strictly forbidden for all regions to approve various virtual currency "mining" projects, and all existing virtual currency "mining" projects will be completely shut down. 2. Resolutely investigate and correct the project entities that are engaged in virtual currency "mining" in the name of big data, supercomputing centers, etc. Stop providing venues and electricity support for virtual currency "mining" activities. 3. Inspections and spot checks will be carried out on the cleanup and rectification in the later stage, so please prepare relevant materials.

Sichuan has not yet issued any specific detailed documents since holding a research seminar on "virtual currency" on June 2.

Affected by regulatory policies, the hash rate of some Bitcoin mining pools serving Chinese miners has dropped sharply in the past 24 hours.

According to data from BTC.com, the hash rates of major Chinese Bitcoin mining pools such as AntPool, Biyin, F2Pool, and BTC.com have all dropped by more than 20% in the past 24 hours, down 29.61%, 20.21%, 20.07%, and 21.84% respectively. Among the top five mining pools, only the hash rate of the ViaBTC mining pool increased slightly by 1.95%.

The hash rate of exchange mining pools such as Binance Pool, Huobi Pool, and OKEx Pool also dropped by around 20%.

As of press time, the total computing power of the Bitcoin network is 143.82EH/s. In the short term, it has dropped significantly since June 8.

A new wave of going overseas

Under strict regulation, the cryptocurrency mining industry, led by China, is shifting overseas, and a trend of global distribution is emerging.

Take Canaan Technology as an example. Judging from the sales of mining machines, leading mining companies are trying to go overseas. On June 1, Zhang Nangeng, chairman of Canaan Technology, said that as of May 31, 2021, Canaan's total unfinished orders exceeded 149,000 mining machines. It has signed purchase orders for more than 10,000 mining machines with Mawson, a US-listed company, and Genesis, an international mining giant. There are 29 customers with orders for more than 1,000 units. In addition, Canaan stated that it will start self-operated mining in Kazakhstan in early June. According to the first quarter 2021 financial report released by Canaan Technology, the company's revenue from overseas markets accounted for 78.4% of its total revenue in the first quarter of 2021, compared with only 4.9% in the same period of 2020.

On the other hand, since the end of 2020, many overseas listed companies have disclosed the purchase data of Bitcoin mining machines. According to Jishi Communication data, as of February 19, 2021, 17 listed companies disclosed that they had purchased Bitcoin mining machines, of which 16 disclosed the number of Bitcoin mining machines (a total of 335,000 units), and 10 disclosed the computing power of these mining machines (close to 21EH/s), which exceeded 16% of the total Bitcoin network computing power (136.18 EH/s) during the same period.

In the face of the current regulation, Edward Evenson from SlushPool said in a recent media interview that 300-400MW Bitcoin miners have recently contacted him, seeking to place machines in certain areas of North America and the European Union, and some are preparing to ship machines to Kazakhstan. Machines in Xinjiang (mainly coal-powered) are transferred to nearby areas in Central Asia. New machines from Bitmain and MicroBT will be shipped to North America. Machines heading to North America usually seek traditional data centers at cheap "all-inclusive" hosting prices, as is customary in China. China's computing power is not declining, but moving. Bitcoin computing power is becoming more and more widely distributed around the world.