The beliefs of crypto market participants often depends on political and economic factors: the price of crypto assets, regulations in a specific state, or political events. For Chinese miners, all the same, the factors differ somewhat. For several years, Chinese mining operations accept been largely reliant on climate. While Western crypto companies fearfulness falling stock prices and regulators, the survival of many crypto mining operations in China depends on rain.

Chinese miners have recently migrated from the southern regions to the due north, where electricity prices can exist as low equally $0.01. This migration has led to a surge in the Bitcoin (BTC) hash rate past more than xl% in 2 days. While the migration occurs annually, the wet season closing out may not exist the only contributing cistron this year.

The 'great miner migration'

The migration of Chinese crypto miners is a common practice that is mainly affected by the climate determining electricity costs. Eddie Jiang, chief operating officer and partner of mining pool ViaBTC Grouping, explained to Cointelegraph that from Apr to Oct, China's southern provinces run into abundant rainfall, creating a surplus of hydropower and subsequent cheap electricity prices.

Co-ordinate to Dejun Kenny Ge, founder of Zhongda Jinfu Finance and co-founder of Shanghai-based investment platform Dd.finance, when moving from China'south north to its southwestern regions, miners can save about $0.18 per kilowatt (12 yuan per kilowatt). When the moisture flavour in southern regions ends in late October, the price of electricity rises to about $0.054/kWh. At this time, miners shift their rigs to facilities in northwestern regions such equally Xinjiang, Inner Mongolia and Qinghai, where electricity typically costs about $0.05/kWh.

Low temperatures in the northern regions are some other factor contributing to the relocation of Chinese miners from the southward. Calling this procedure the "bang-up miner migration," Alejandro De La Torre, vice president of crypto mining pool Poolin, explained: "It is cold in Northern Prc, then mining farms don't need to spend on cooling for the mining rigs."

Nonetheless, not all miners adhere to this principle. Wishing to remain anonymous, a local crypto miner spoke to Cointelegraph on the matter, saying that while Cathay has two mining hubs — ane in Sichuan province (southwest Cathay) and ane Inner Mongolia (North), Chinese miners rely more on southern capabilities. He also noted that many Sichuan miners are now sticking to their locations rather than relocating to the North: "Our mining capacity in Inner Mongolia currently generates only about 20%–30% of our overall hash rate."

It's not just the climate this time?

Taras Kulyk, senior vice president of blockchain business development at Core Scientific, a digital asset mining infrastructure provider in North America, revealed that Chinese miners have come to realize that the mass migration of units every flavour is not the well-nigh sustainable model.

Some sources merits that Chinese miners are migrating this year not simply considering of climatic changes, but considering of tightening regulation in the country and force per unit area on crypto organizations by the regime. Before, it was reported that the co-founder of the OKEx exchange was arrested past the Chinese police. Zhongda Jinfu Finance's Ge noted that in China, mining facility operators take been the hardest hit by contempo, tighter regulations:

"Due to stricter regulation, many mining facilities in Inner Mongolia which operates beneath the national grids have airtight downward. Similarly for Sichuan and Yunnan province, many of the mining facilities which tap on straight ability supplies from power stations have closed down."

Since 2017, the Chinese government has increased the number of inspections conducted at crypto farms, many of which have since closed. As Jiang noted, local governments check the compliance of mining electricity consumption every year. "For mining farms that use non-compliant electricity, the regulatory government will require rectification until they meet the requirements." He then went on to add: "This year, some local governments take fix compliant consumptive electricity, and mining farms can apply to use it for mining. I recall this has made greater progress in policy supervision."

Still, few local miners relate the mining functioning closures to stricter regulation. In fact, co-ordinate to some, changes in the mining marketplace in China are, to a greater extent, associated with the insufficient production capacity of mining motorcar manufacturers and the institutionalization of the industry, with funds, listed companies and private equity firms starting to replace retail miners. According to Jiang, the increased number of institutional miners significantly affects the operation and maintenance requirements as well as investment decisions of original miners.

Is the number of miners decreasing?

According to Ge, the mining market place is entering an era of large-scale operation, increased specialization and financialization, so it has go challenging for smaller mining facilities to concenter miners, equally he told Cointelegraph: "Back in 2019, China deemed for more than lxx% of the world's crypto mining market." However, he as well added that following the deport market in 2019 and a precipitous price refuse in 1Q 2020, many miners with high-consumption rigs have exited the market. Overall, "the sentiment in the Chinese crypto mining marketplace remains neutral," he said.

So far, local companies do non see a significant reduction in the number of large farms. Some even talk about an increase in product. De La Torre agreed that the number of farms in China and globally have increased, calculation: "The mining industry in Communist china is not facing any big challenges at all, as we tin can meet past the global hashrate increment in the last couple of years and especially in the last year."

Meanwhile, according to Jiang, the mining sector's expansion may once again be attributed to the archway of institutions, which have set up larger mining farms.

Relocation to other countries

While local miners claim that "everything is as usual," some experts suggest that Mainland china may soon lose its mining dominance. Amongst the reasons, Ge highlighted the growing share of international mining operations as well every bit overseas institutions such as Grayscale Bitcoin Trust increasing their Bitcoin and Ether (ETH) long positions: "In the near future, there could be an increasingly fragmented and distributed market globally."

In search of alternative conditions for placing their mining capacities, Chinese miners are at present considering even drastic measures such as moving operations to other countries such every bit Kazakhstan or Russia. Speaking with Cointelegraph, a crypto miner from Changzhi noted that Russia is one of the well-nigh bonny countries for Chinese miners:

"I always wondered how come Red china is mining about 65% of all BTC currently and not Russia. I'm really interested in trying business in Russia. We are planning to come after the pandemic to spotter the prospects of mining in Russia. In fact, many Chinese companies exercise."

Other miners seem to be choosing North America, which, due to its stable energy infrastructure, fiscal resource and evolving regulatory clarity, is now becoming a feasible option. Kulyk believes that Chinese miners are seriously researching the prospect of diversifying operations by moving them to North America. He added that Core Scientific is currently working with several Chinese players to move a portion of its hardware to North America, further explaining:

"One of the biggest aspects of North America every bit an ideal mining environment is that its power remains stable, without changing cloth within the different seasons. Virtually importantly, regulatory policy in North America is clear and favorable towards digital assets."

Derek Boirun, CEO and co-founder of peer-to-peer trading platform Realio, and Bitcoin mining pioneer Marshall Long shared the contrary view with Cointelegraph:

"Chinese miners aren't happy to move to the U.Southward. for cheaper power because of the political instability. Close contacts are able to become cheaper power prices in the U.S. only are not comfy setting up Chinese-owned businesses in u.s. with all the regulatory deportment confronting China recently."

Then it seems, one can inappreciably speak of large-scale migrations in the short term. Nevertheless, local miners practise not intend to leave the marketplace en masse, and it seems that they accept already provided for several working scenarios to continue their business. In response to the closure of coal plants, Chinese miners have started connecting to hydroelectric power plants, moving to colder regions at the end of the rainy flavour, and coping with rises in electricity costs by using cheaper equipment.