Barry Silbert, the Grayscale CEO, recently said that he believes Bitcoin mining is slowly moving away from China into the US. According to a recent Aljazeera report, Silbert had observed this shift over the past three to six months.
He said that companies were actively trying to leave China, heading mainly to Canada and the USA. He made the comments during an online presentation but he did not explain why companies were leaving China. The report noted that most mainstream investors were still not willing to invest in Bitcoin due to its high volatility, security issues, and a lack of transparency. Grayscale is the biggest crypto asset management firm in the world. It oversees over $3 billion worth of crypto assets. The company has been working hard to try and attract more institutional investors into the crypto sector.
Some of Greyscale’s popular products include the:
- Greyscale Bitcoin Trust
- Greyscale Ethereum Trust
- Greyscale XRP Trust
- Greyscale Litecoin Trust
In a recent photo published by Visionary Financial, it was displayed how well the Bitcoin and Ethereum trust were doing this year compared to traditional stocks. At the time of sharing, the Greyscale Ethereum Trust was experiencing +233% gain year to date.
China Bitcoin Mining
Bitcoin is a favorite of retail investors and crypto enthusiasts. Most are drawn to the quick returns that are possible in just a short time. This is especially so in an era of extremely low-interest rates. It has proven quite attractive amongst Bitcoin miners in China. Today, the nation accounts for over 65% of the hash power. Besides that, Chinese companies such as Bitmain are the biggest manufacturers of mining equipment.
The high interest in mining Bitcoin in China has led to a huge demand for mining equipment in the nation. However, the mining industry in China is not open. The figure stated above could be much larger or smaller.
One of the reasons why China is attractive to Bitcoin miners is the cold weather and cheap cost of power. Various other nations, especially Scandinavian nations have also taken an interest in Bitcoin mining due to their cold weather and the cheap cost of power.
China Bitcoin Mining Ban
The CEO of Grayscale did not give reasons for his observations. However, there are several obvious reasons why this might be happening. One major reason why this might be happening is that China has recently intensified efforts to crack down on Bitcoin mining. For instance, in December, the country seized about 6,890 mining rigs from illegal mining operations set up around the country.
Another reason might be that cheap power in China is only accessible in extremely remote areas of China. While these areas have cheap power, there is a lack of modern social amenities that a person might want to enjoy.
In North America, the availability of cheap power even close to city centers might be attracting miners to the region. Besides that, the authorities in this region do not routinely crackdown on Bitcoin mining. Consequently, miners do not have to worry about any legal repercussions, including their equipment being confiscated for mining Bitcoin.
Summary
While some miners may be shifting out of China, the nation will likely remain a major mining hub. The extremely low cost of living coupled with its extremely cheap power means that most local miners in China will not move out of the nation to North America. If China plans to roll out their CBDC ( central bank digital currency ) , it would be believed that China might take a step back from the harsh stance on mining. Miners take a big risk moving operations to the US, especially since the US is still lagging behind the development & research China has been deploying to the space.
Image Source: Pixabay
Notice: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. The information has been obtained from sources we believe to be reliable; however no guarantee is made or implied with respect to its accuracy, timeliness, or completeness. Authors may own the crypto currency they discuss. The information and content are subject to change without notice. Visionary Financial and its affiliates do not provide investment, tax, legal or accounting advice. This material has been prepared for informational purposes only and is the opinion of the author, and is not intended to provide, and should not be relied on for, investment, tax, legal, accounting advice. You should consult your own investment, tax, legal and accounting advisors before engaging in any transaction. All content published by Visionary Financial is not an endorsement whatsoever. Visionary Financial was not compensated to submit this article Please also visit our Privacy policy; disclaimer; and terms and conditions page for further information.