Overseas | The North American mining market is booming, and these companies have successfully listed solely on the basis of mining profits

Domestic mining policies are becoming tighter, is the mining industry also going to cool down?

Domestic regulation of Bitcoin is becoming increasingly strict, from prohibiting Bitcoin online transactions to gradually extending to the mining field. As luck would have it, on the first anniversary of September 4 , the Ministry of Industry and Information Technology issued a document that once again dealt a heavy blow to the domestic mining industry. The " 2018 Second Quarter Cybersecurity Threat Situation Analysis and Work Summary" published on its official website characterized the behavior of "illegal mining" . It will organize relevant units to carry out special governance work on Trojans, zombies, viruses, mobile malicious programs and other related malicious programs. The National Internet Financial Risk Office stated that more than 160 digital currency-related platforms in China have basically achieved risk-free exits. The next step will be to take necessary control measures on 124 virtual currency trading platform websites whose servers are located abroad.

North American mining enthusiasm is ignited by the capital market

In contrast, mining is extremely popular in the North American market. After HIVE Blockchain, a Canadian mining company , was successfully listed on the Canadian TSXV (Toronto Venture Exchange) last September, a number of Canadian mining companies have entered the capital market. Canada has become the world's main capital market for blockchain companies to raise funds through the secondary market.

Among the mining companies listed in Canada, the more well-known ones are HIVE Blockchain ( TSXV : HIVE ), with a market value of 226 million Canadian dollars and a share price of 0.68 Canadian dollars; and Hut 8 Mining ( TSXV : HUT) , with a market value of 294 million Canadian dollars and a share price of 3.55 Canadian dollars. Other companies have relatively lower market values, such as HashChain Technology ( TSXV: KASH ), with a market value of 16 million Canadian dollars.

It is worth mentioning that HIVE Blockchain is the first company in the world to successfully go public with cryptocurrency mining as its main business. The company operates multiple cryptocurrency mines , mining eight cryptocurrencies including Bitcoin , Ethereum and Litecoin . According to the latest financial statements, the company's total revenue was more than 16 million and its earnings before interest, taxes, depreciation and amortization ( EBITDA ) was 1 million Canadian dollars between March 2017 and March 2018 .

HIVE Blockchain recently announced a major expansion of its mining business , purchasing a large-scale Bitcoin mining facility and receiving $100 million in private equity investment . According to Forbes' blockchain company scoring model, HIVE Blockchain is one of the top five blockchain stocks recommended by Forbes in 2018. Since the company reserves the mined cryptocurrency as an asset reserve, the company's valuation may also increase as the cryptocurrency appreciates.

Cryptocurrency companies listed in the United States are mainly manufacturers of mining hardware, such as graphics card market leader NVIDIA , microprocessor manufacturer Advanced Micro Devices , and ASIC chip manufacturer TSMC; Marathon Patent Group is one of the few companies listed on the Nasdaq exchange in the United States with mining as its main business. The company currently has a market value of US$21 million and a share price of US$0.9. Interestingly, the only mine currently operated by the company is located in Quebec, Canada.

Foreign mining policies and electricity benefits

Relaxed regulatory policies and low electricity costs are the reasons for the booming mining market in North America. Canada has become a destination for global mining companies. Cole Diamond, CEO of Coinsquare, a leading cryptocurrency exchange , said that as the birthplace of Ethereum and the incubator of many blockchain projects, the Canadian government has always held a positive attitude towards the cryptocurrency industry. Quebec and Manitoba are more favored by domestic Bitcoin mining companies. Quebec has extremely rich hydropower resources, and its electricity costs are among the lowest in North America. Hydro-Quebec said that the province's surplus energy is equivalent to 100 terawatt-hours in 10 years , and 1 terawatt-hour can power 60,000 households in Quebec for one year. The industrial rate for local data centers is 2.48 cents /kWh , and the industrial rate for mining companies is 3.94 cents/kWh. Manitoba not only has cheap electricity and land prices, but also has lower temperatures, which can solve the heat dissipation problem when Bitcoin mining computers are running .

Mining is legal abroad, and overseas mining is prevalent

Following the ICO "going overseas" wave set off by the regulatory crackdown in 2017, another round of large-scale mining companies are preparing to "go overseas" . After successfully setting up a regional headquarters in Singapore and conducting Bitcoin mining operations in Switzerland and Israel, Bitmain is building a factory in Rockdale, Texas, USA , and is expected to start mining operations early next year. Bitmain announced that it will invest $500 million in the next seven years to build a new blockchain data center in the United States as part of its "North American Strategic Investment and Expansion Plan". The factory will employ 400 local residents and intends to provide relevant training for employees . In addition, the third largest mining pool BTC.Top is opening a mine in Canada , and the fourth-ranked ViaBTC is operating in Iceland and the United States. And countries in neighboring regions such as Malaysia, Kyrgyzstan, Russia, Belarus, and Iran are also active in Chinese mine owners.

Views from the Computing Power Think Tank Research Institute

Compared with the tightening of domestic mining policies, many foreign countries have a positive attitude towards mining. The successful listing of many companies in North America whose main business is mining has greatly encouraged mining companies. From the listing of these companies, it can be found that the mining business is indeed very profitable. Some mine owners revealed to the Computing Power Think Tank that it is possible to recover the investment in one year of opening a mine in China , and then obtain high and stable profits from the difference in electricity bills and hosting fees every year. Compared with low electricity prices and cold climates, the relatively stable cryptocurrency policies in Canada and the United States are the most attractive factors for many domestic mining companies such as Bitmain to go overseas. It can be seen that policy risks are the core issue of opening mines in China. However, it should be noted that there is also a certain degree of uncertainty in foreign policies in this regard. Reuters previously claimed that the Canadian province of Quebec has recently suspended the approval of new mining projects and is considering increasing electricity charges. Risk and return are always positively correlated. Under certain policy risks, the lower stock prices of North American mining companies are still very attractive to investors. In the era of the rise of digital currencies, when the price of coins fluctuates greatly, perhaps investing in such mining listed companies is a good asset allocation choice.