INSUBCONTINENT EXCLUSIVE:
Miners also want confidence they won't wake up to news that their business has been outlawed againOne weekend in late June, hundreds of
gloomy Bitcoin miners crowded into a luxury hotel in Western China
They had a big problem: Just weeks earlier, the Chinese government banned cryptocurrency mining over concerns about illicit coal mining and
underlying financial risks
Now they had to figure out how to move millions of computers out of the country.The miners sat in rows of white chairs in a hall at the Gran
Melia Chengdu Hotel and listened intently to the executives at Bitmain Technologies, the world's largest mining-equipment maker
In between presentations about Texas energy fundamentals and crypto mining in Kazakhstan, the attendees nibbled cupcakes, drank cocktails
and discussed the dismal outlook for their local industry.Listen to this storyBitmain's employees were offering to serve as matchmakers,
hooking miners up with data centers in the U.S., Central Asia and Europe
They also cautioned that an unchecked rush into new markets would jack up costs for all of them
One slide presented at the event read, "Hold Together for Warmth, Say No to Vicious Competition."Just hours after the conference, the
urgency of the situation came into full view
Alex, a Chinese miner who didn't want his last name published for fear of government retribution, was out singing karaoke with some of his
fellow miners when he called to check in on his machines in the mountains outside Chengdu
His colleague told him that local authorities had just shut off the power to his facility, leaving the mine silent and potentially
worthless."All my money is gone," he said, cursing as he chugged a beer
"Every day I'm losing money by not running those machines."The Chinese miners forced to leave behind the country's cheap electricity from
abundant coal and roaring rivers have found themselves thrust into a wild and extreme world of crypto power-hunting
Just as miners sprinted toward gold fields in California and Alaska over a century ago, Bitcoin miners now are bolting toward any source of
inexpensive, reliable power they can find
Their next destinations matter greatly to an industry emphasizing decentralization and independence, and to other energy-consuming sectors,
with which they are competing for access to greener power.Cheaper PowerA Bitcoin mining rig doesn't pull anything out of the ground, of
Instead, it is usually made up of thousands of computers, specially built to run the complex calculations that maintain the cryptocurrency's
These computers are stacked on shelves in warehouses, often with huge water-cooling fans
In China, the warehouses are usually situated close to their power sources, such as standalone hydropower stations and thermal plants
affiliated with coal mines
Electricity accounts for about 80 per cent of a miner's operating cost, according to Tyler Page, the chief executive officer of Cipher
Mining Technologies Inc.The miners who complete the calculations are rewarded with new Bitcoin, which has ranged in value from a peak of
almost $65,000 before China outlawed mining to about $33,500 today
Around 65 percent of the world's Bitcoin mining took place in China as of April last year, according to the latest data from the University
of Cambridge.Cheaper power is the reason China's neighbor, Kazakhstan, has become a top destination for fleeing miners
The former Soviet nation has over 22 gigawatts of electric power capacity, mostly from coal and gas-fired stations
It also borders the region of Xinjiang, which once held nearly 36 per cent of the world's bitcoin mining
Bitcoin miners can get electricity for as low as about 3 cents per kilowatt-hour, according to Dmitriy Ivanov, sales director at
The country is also cool enough that the data centers don't require any air conditioning to keep them from overheating, which can add as
much as 30 per cent more power consumption.Enegix runs a server-hosting business in Kazakhstan, where it is building data centers at which
miners can pay a fee to plug in their machines
At the end of last year, the company built its biggest site yet, a 180-megawatt data center on 37 acres of land near the northeastern town
The region is an industrial hub fueled by one of the largest coal-fired power stations in the world outside of China.In June, Ivanov started
to get messages daily from miners in Sichuan and Inner Mongolia who needed to relocate after Beijing's crackdown."We stand to benefit from
it, but these people are facing devastating losses in terms of all the infrastructure that has to be deployed elsewhere," he said.Enegix's
clients will soon be shipping about 10,000 mining machines, a mix of Bitmain's S19Pro and the Whatsminer M21S model from Chinese
manufacturer MicroBT, to Kazakhstan by plane
Transport by land from China would be cheaper, but trucks can get held up at the border for weeks
Spending that time mining Bitcoin instead can make up for the extra cost of airfare.Didar Bekbauov runs another Almaty-based Bitcoin mining
hosting company, a smaller competitor to Enegix
He was similarly inundated with messages."So many Chinese are reaching out to us and asking for help to relocate the equipment," Mr Bekbauov
"They ask every Kazakh they know to help them with electricity."But there is a limit to Kazakhstan's potential: Its electric grid has added
only a little over 3 gigawatts of capacity in the last 20 years, according to data from BloombergNEF
That's leaving little room for the surge in mining machines to get connected
Mr Bekbauov now has to turn customers away."Every spare kilowatt is already booked," he said.Renewable SourcesFor some miners, the decision
to move out of China is also an opportunity to clean up their power supply.It's difficult to say how dirty Bitcoin mining is overall, but
it's a reflection of the power supply to a mine's location
Earlier this year, tens of thousands of mining machines consumed about 45 million kilowatt-hours of power per month in an area of western
China that depends on coal-burning power plants, the official Xinhua News Agency reported
That's about 15,000 tons of standard coal
Overall, mining machines globally consume about as much power as all of Bangladesh, a country of more than 160 million people.While some of
that power is green, the majority of the world's electricity still comes from burning fossil fuels
Earlier this year, Elon Musk said Tesla Inc
would no longer accept purchases in Bitcoin because of its carbon footprint
An alliance of companies launched the Crypto Climate Accord earlier this year to address criticisms and vowed to help the industry shift to
100% renewable power consumption.Crypto miners are coming up against a much bigger drive to decarbonize power to combat climate change
The percentage of energy from renewable sources would need to increase to about two thirds of supply by 2050, up from around 12% in 2020, to
keep temperatures from rising more than 1.5 degrees Celsius from pre-industrial levels, according to the International Energy Agency
Countries around the world, including China, the U.S
and the EU will have to ramp up construction of wind farms and solar parks to come close to hitting their targets.Renewable energy sources
like wind and sunshine may be abundant at times, but demand for them is set to surge as cars, home heating and heavy industries increasingly
The Nordic region, which has long been a popular Bitcoin mining spot because of its ample hydropower, began running out of excess
electricity earlier this year as industrial users ramped up production."There's a more noble use of renewable power than Bitcoin mining,"
said Peter Wall, chief executive officer of London-listed mining company Argo Blockchain Plc
"But the fact is people are going to mine Bitcoin full stop
It's not going away."Regulatory ConcernsMiners also want confidence they won't wake up one morning to news that their business has been
Bit Digital Inc., a Nasdaq-listed mining company, began moving some of the 30,000 machines it operated in China to North America back in
By the time Beijing cracked down, Bit Digital was able to keep mining with as little disruption as possible.Even within the U.S., there are
regulatory differences among states
Cipher Mining Technologies Inc., the U.S
arm of Netherlands-based Bitfury Holding BV, is working to build up mining capacity in Texas, the only state with a deregulated power grid,
and Ohio because of the state's cheap power prices and low-carbon power sources
A state like New York, where lawmakers previously proposed a bill that would have limited crypto mining in the state, isn't as
attractive.The physical attributes of a site matter too: extreme temperatures in either direction are a negative, as is an overly dry and
"Literally the dust blows into the computers and you have physical problems," said Cipher's Page.Some of Bit Digital's mining rigs were
shipped to a data center in Kearney, Nebraska, where the company already has about 5,000 machines noisily mining Bitcoin
"You can't hear a damn thing in here!" Chief Executive Officer Bryan Bullett yelled on a recent tour of the facility as the machines' fans
whipped his hair around.A warehouse a mile from the data center holds Bit Digital's displaced Chinese rigs
The machines were piled to the ceiling on wooden pallets, waiting for an opening so they could be put to work
"It's not great to see them sitting here in boxes, because they could be plugged in and making money," said Bullett
He estimated that 500,000 mining machines are being shipped out of China as a result of the crackdown.Bit Digital is considering setting up
operations outside North America, but local regulations and stability are a concern
The president of El Salvador announced last month that his country would be the first to adopt Bitcoin as legal tender and directed the
state-run geothermal electric company to come up with a plan for volcano-powered Bitcoin mining
Bullett and other Bit Digital executives flew to the Central American country late last month for two days of meetings with the president's
cabinet.Bitcoin miners from other countries want to know that El Salvador's enthusiasm for the digital currency will survive a change in
leadership."The question is naturally going to arise about stability," Mr Bullett said, especially with a capital-intensive industry like
Asked whether he would send Bit Digital's machines to a site El Salvador is developing, the chief executive paused
"It depends on the details," he said
"It's certainly worth monitoring."Power BrokersBeyond the large U.S.-based mining companies, there are also smaller middlemen making a
business out of the big move.Ever since news of the beginning of the crackdown in China first broke in late May, Tim Kelly, chief executive
officer of BitOoda has barely slept
Mr Kelly started BitOoda in 2017 to provide research, investment banking and other services to Bitcoin-mining clients
From his beach-front home on the island of Nantucket off the coast of Massachusetts, Kelly spent most nights this summer on the phone with
When the sun rose, he would start calling people in the U.S
who could provide sites with enough electricity to host mining operations."There's so much absolute desperation to secure sites as quickly
as possible," Mr Kelly said.While China's restrictions strangled the Bitcoin mining industry for now, the pain will only be temporary
With increasing capacity in places like the U.S., BitOoda estimates that the amount of computing power used for mining will be back to its
pre-crackdown level by early 2023 and continue growing for the rest of the decade.Business for BitOoda had been progressing steadily
By May of this year, the company built up a pipeline of under 500 megawatts of grid connections for Bitcoin miners looking to plug into
Kelly's sleepless nights helped that figure boom to about 2,000 megawatts of deals in the works, with about 70 per cent going to Chinese
clients.It's not easy to just set up a Bitcoin mining operation out of nowhere
Mr Kelly's clients need not only power supply, but also substations and transformers, devices that filter the high powered volts in the
power grid to be gentle enough that they won't fry all those valuable computers
Setting all the machinery takes time, in some cases as long as 18 months to get up and running.Most of them have already made down payments
on new machines and are looking for a new address in a hospitable location
This time, they want to make sure the sites will last
For many, that means trying to connect to renewable power sources, which the Biden administration has signaled are the future of the
Chinese clients are even willing to pay higher prices for green credentials."Every conversation we have starts with the the site's potential
What is it? If it's coal we won't even talk about it
Gas, maybe," said BitOoda's Chief Strategy Officer Sam Doctor
"They're looking for renewables
That's a really important step in the greening of bitcoin."(Except for the headline, this story has not been edited by TheIndianSubcontinent
staff and is published from a syndicated feed.)
