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As Chinese authorities make it more difficult than ever to trade cryptocurrency into fiat, miners could be forced to relocate to other jurisdictions, local sources say.
On Monday, cryptocurrency industry blogger Colin Wu tweeted that miners in China struggled to pay for electricity after authorities started cracking down on OTC brokers in the country.
“74% of the miners surveyed told Wu that the payment of their electricity bills was heavily affected,” the tweet read. China recently started blocking bank accounts and cards involved in cryptocurrency purchases and investigated the two largest brokers, Zhao Dong and Xu Mingxing, Wu wrote in a blog post.
It is currently a “challenge” for Chinese miners to convert bitcoin or tether to yuan, as “many people froze their bank accounts while exchanging cryptocurrencies for RMB on OTC platforms,” said Thomas Heller, former global business director at the mining pool F2Pool and now chief operating officer of the mining and media company HASHR8.
As reported by CoinDesk, in June, Chinese authorities stepped up efforts to block bank accounts that could be linked to illegal activities such as money laundering via cryptocurrency deals.
“It has always happened, but this year more than others,” Heller told CoinDesk. “I would say it has become more common in the past couple of months.”
However, it downplayed the extent of any exodus of miners from China, even though HASHR8 is currently helping some operators move their operations, most to Russia but some to Kazakhstan.
“Most Chinese miners are mostly only familiar with the Chinese market, so it’s hard for them to move overseas and start mining,” Heller explained. “His [the China OTC clampdown] another factor that can make mining abroad more attractive, however this alone is not enough to push them overseas. Rather, they would try to find some alternative solutions “.
Meanwhile, some operators are disconnecting their miners, Wu wrote in a blog post. “There are also miners who have claimed that their mining machines have been shut down for a month because they cannot sell the cryptocurrency to pay their electricity bill.”
Some OTC companies that specialize in serving mining companies “have also closed their business,” Wu wrote.
Most of the larger mining pools are based in China. An interactive map from Cambridge University’s Center for Alternative Finance shows that the nation’s miners currently account for nearly 72% of the average monthly bitcoin hash rate, which is the computing power dedicated to supporting the network.
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