Under the "Carbon Neutrality" policy, blockchain computing centers are accelerating their transfer to North America

In contrast, overseas listed companies have invested heavily in purchasing mining machines or acquiring shares in mining pools.

In the view of industry insiders, the biggest change in the computing power industry over the past year is the shift of the center from China to North America and to Nasdaq-listed companies. China's share of Bitcoin computing power may have fallen below 50%.

"Carbon neutrality" policy is coming strongly

"Carbon emission policy is a severe test for the computing power industry. Policy factors will have a significant impact on the development of the domestic computing power industry. It determines whether capital can enter on a large scale and how big the space for the industry is." Liu Fei, CEO of Bixin Mining, told "Chain News".

Although the prospects are bright, the current computing power industry still faces many limitations and constraints, mainly including: technical constraints, mainly the hash rate growth rate may approach the limit; cost constraints; environmental constraints; diminishing returns constraints; imbalance in the global distribution of mining pools; market monopoly model constraints, as well as institutional and regulatory constraints.

Among them, the most noteworthy is the relationship between computing power and energy consumption. According to the design of virtual currencies such as Bitcoin, its production is similar to "mining", through which each computer node uses its computing power (computing power) to grab the right to record accounts and obtain Bitcoin rewards. However, the mining process consumes a lot of energy.

According to the IEA's global electricity consumption rankings in 2021, Bitcoin mining power consumption has exceeded that of Norway, the Netherlands and other countries.

Especially during the 2021 National People's Congress, the government work report highlighted "carbon peak" and "carbon neutrality". In the context of clean energy being the main theme, the top priority of local governments in my country is to reduce the use of coal-fired power generation. This means that using thermal power for virtual currency mining will increase costs or even be banned.

Since miners in Inner Mongolia mainly use coal, Inner Mongolia issued an "ultimatum" to the virtual currency mining industry in February this year. The Inner Mongolia Autonomous Region Development and Reform Commission issued the "Several Guarantee Measures for Ensuring the Completion of the 14th Five-Year Plan Energy Consumption Dual Control Target Task (Draft for Comments)", which shows that in order to complete the 14th Five-Year Plan energy consumption dual control target task in Inner Mongolia Autonomous Region, virtual currency mining projects will be completely cleaned up and shut down, and all will be withdrawn by the end of April 2021, and it is proposed to strictly prohibit the establishment of new virtual currency mining projects.

On April 27, it was reported that the Beijing Municipal Bureau of Economy and Information Technology issued an "Emergency Notice on Investigating the Situation of Bitcoin and Other Cryptocurrency Mining Businesses in Beijing's Data Centers", which required a review of the relevant situations involving Bitcoin and other cryptocurrency mining in Beijing's data center services. All relevant units involved in related businesses were required to provide feedback on the power consumption of mining businesses in the past year and the proportion of total energy consumption before 12:00 noon on April 28. In response, the Beijing Municipal Bureau of Economy and Information Technology replied that the notice was indeed issued by the bureau, and that it was mainly conducted from the perspective of business types and energy consumption carried by data centers, which was a normal business operation of the bureau.

Under policy pressure, a large number of mining equipment will be transferred to Sichuan and Yunnan, where hydropower is the main energy source, and some large miners have begun to go overseas. This can also be seen in the layout of some leading miners. For example, Canaan Technology's latest report shows that overseas markets have become the focus of its layout. Some analysts speculate that Dekrasov and Kazakhstan may be the next destinations for Chinese miners. "The strength of the mining industry in mainland China will become increasingly unstable."

"China is the region with the largest and most concentrated computing power in the world. The introduction of the national 'dual carbon' policy has restricted Inner Mongolia's computing power industry and prompted more computing power companies to work hard to achieve the 'dual carbon' goals." Yu Wei, founder of Zhijian Xinyun, told Chain News.

Liu Changyong, director of the Blockchain Economic Research Center of Chongqing Technology and Business University, believes that in addition to regulatory policies, the main factors affecting the development of the domestic computing industry include the electronic product manufacturing and Internet industry foundations, as well as the scale of the market economy. "Thanks to my country's continued high economic growth, especially the rise of the Internet economy, my country has a relatively large advantage. In addition, my country's market economy is large enough, the division of labor is very detailed, the market is active, and there is sufficient capital, so it is very fast to enter and develop emerging industries."

Computing power shifts from China to North America

According to a Bitcoin mining power distribution map released by the Cambridge Center for Emerging Finance (CCAF) in May 2020, Bitcoin mining activities are mainly concentrated in China, accounting for more than 65% of the total network computing power; the United States ranks second with 7.24%, Russia ranks third with 6.90%, Kazakhstan ranks fourth with 6.17%, Malaysia ranks fifth with 4.33%, and Iran ranks sixth with 3.82%. Other countries account for no more than 1% of the total network computing power.

Although China has an absolute advantage in mining computing power, due to policies, technology and the replacement of old and new mining machines, Bitcoin computing power is quietly but rapidly shifting overseas, especially to North America. "In the past year, the biggest change in the computing power industry has been the shift to North America and to Nasdaq-listed companies. China's share of Bitcoin computing power may have fallen below 50%." Liu Fei told ChainNews.

According to statistics from Guosheng Securities, as of February 19, 2021, 17 listed companies disclosed that they had purchased Bitcoin mining machines. Among them, 10 overseas mining stocks disclosed their computing power and held nearly 21EH/s of Bitcoin computing power, accounting for 16% of the total network computing power. Guosheng Securities found that listed companies that are keen on purchasing Bitcoin and its mining machines are mostly listed in the United States and Canada. According to the percentage of computing power, Nasdaq has the most computing power, close to 82%.

Especially since 2020, overseas mining stocks have been "crazying" for computing power, and many overseas listed companies, including Marathon Patent Group and Riot Blockchain, have announced the purchase of Bitcoin mining machines and Bitcoin.

Among them, Marathon Patent Group, an American company that occupies half of the mining stocks, has been purchasing a large number of Antminers since May 2020. In December 2020, MARA purchased 10,000 Antminer S19j Pro and 70,000 Antminer S19 in two batches. The estimated delivery time of S19j Pro is August-September 2021, and the delivery time of S19 is July-December 2021. This will bring MARA's total computing power to 10.36 EH/s, and it may become the largest miner in the United States this year.

Another American company, RIOT, currently has more than 7,040 units, and the 15,600 Ant S19 Pro ordered earlier will be delivered in batches from January to June. According to information released by RIOT on December 21, 2020, the company has purchased another 3,000 S19 Pro and 12,000 S19j Pro, with an estimated delivery time of May to October 2021.

Liu Fei believes that "Bitmain and Shenma, the two major mining machine manufacturers, have supplied a large amount of production capacity overseas, which means that the new computing power has little impact on China. Even some of the mining machines consumed domestically eventually flowed to Russia and other places."

"The computing power ecological chain includes chips, mining machines, mining farms, mining pools, cloud computing power platforms, computing power trading platforms, etc. It has become a very large industry with detailed division of labor. Overall, the computing power industry has become highly specialized, and the advantages of teams or projects with rich experience, strong technical strength and strong financial resources are becoming more and more obvious, and the threshold for ordinary people to participate is getting higher and higher." Liu Changyong told "Chain News".