China’s ban on cryptocurrency mining has forced Bitcoin miners to go abroad. Many are moving to Texas, which is fast becoming the global cryptocurrency capital of the future.
When China announced a crackdown on bitcoin mining and trading in May, Kevin Penn, CEO of Chinese cryptocurrency mining company Pool Inn, boarded a flight the next day. Mr. Penn told the BBC: ‘We decided to go out forever. [We] will never come back. ‘Headquartered in Hong Kong, Pool Inn is the world’s second-largest bitcoin network, with most operations on Chinese soil. The country was once home to 70 percent of the world’s bitcoin mining, but then a sudden embargo plummeted its value and left its business unaware.
Now China’s ‘bitcoin miners’ are urgently looking for a new home, whether it’s neighboring Kazakhstan, Russia or North America because time is really money for bitcoin miners. “We are looking for a new home for [bitcoin mining] machines,” said Alejandro de la Torres, vice president of the pool. Because every minute when the machine is not on, she is not making money. Some people are calling this migration of bitcoin miners ‘Great Mining Migration’ because many bitcoin miners are involved in this migration, including the pool of executives who have recently moved to Austin and Texas in the far western part of the United States.
Bitcoin is a digital currency that is not embodied but exists and is only exchanged online. They are created when computers ‘mine’ money by solving complex mathematical combinations, and so do computer-operated bitcoin miners. It just consumes a lot of energy.
New Frontier For Bitcoin Mining & For Bitcoin Miners
Mr. Penn immediately felt at home in Texas. A few days after his arrival, he was given an AR-15 rifle as a gift, which he said he could one day use to “hunt hogs from a helicopter.”Although shooting ranges and barbecues in Texas welcome visitors, providing legal protection to the business is a major attraction for bitcoin miners. “What happened to us in China will not happen in the United States,” he said. Texas Governor Greg Abbott has been a strong supporter of cryptocurrency.
He tweeted in June, ‘This is happening! Texas will be a corrupt leader. After that, Lone Star State, Texas, became the second U.S. state to recognize blockchain and cryptocurrency in its trade law, paving the way for corrupt business in the state.
Many Chinese bitcoin companies are looking to Texas for stability and opportunities. Shenzhen-based BIT Mining Company plans to invest 26 26 million to build a data center in the state, while Beijing-based Batman is expanding its facilities at Rockdale in Texas. The small town of about 5,600 inhabitants used to be one of the largest aluminum plants in the world and is now emerging as the next global hub for bitcoin miners. There could be another fundamental link between industry and the state, as de la Toure says Bitcoins and Texas have one thing in common. “Texas people take their freedom and rights very seriously, and so are we bitcoins.”
Experts believe that the crackdown on bitcoin in China was to gain more control over financial markets and that China’s Bitcoin miners move could be a blessing for the United States. Kevin D’Souza, a business professor at the Queensland University of Technology who researches China’s digital currency policy, says “emigration could be beneficial for the United States in advancing the system of talent acquisition and innovation.” In return, he says, bitcoins have access to a developing and modern community, as well as more diverse sources of capital.
Energy & Political Threats
In addition to a stable regulatory environment, the energy-hungry industry is looking for cheap electricity in Texas. Texas is one of the world’s cheapest energy suppliers because of its power grid. Consumers have the freedom to choose between different electricity providers so that electricity providers compete with each other to provide electricity at the lowest prices in the market. Bitcoin farms can also sell unused electricity back to the grid as demand for electricity increases. Although El Salvador is poised to become the first country to adopt bitcoin as a national currency, Mr. de la Torre says bitcoin miners prefer the United States because it has better electricity and communications infrastructure.
But some analysts warn that the ‘Great Mining Migration’ could have a serious repercussion, as cities and towns may struggle to meet their energy hunger. Hundreds of thousands of homes and businesses in Texas were without power for days after a blackout following a deadly blizzard in February. More than 200 people were killed. Bitcoin farms were compensated for staying offline during the power outage.
Resistance In El Salvador
However, suspicions are growing in El Salvador as the country prepares to become the first country in the world to recognize bitcoin as a legal tender on September 7. The government has touted the move as economic growth and job creation. The survey shows that the people of El Salvador are not ready for it and the World Bank has warned against adopting it. Analysts say it is an “attention-grabbing move” by an “authoritarian government.”
Next week will be a historic day as lawmakers voted in June to legalize the corrupt currency. Once the country’s bitcoin law is passed, businesses will be required to accept either the payment or the US dollar, the country’s second official currency. More than 200 new cash machines are being installed in El Salvador to convert dollars into bitcoins. The El Salvador government is offering 30 citizens (£ 22) in free bitcoins to encourage citizens to use its national wallet, which will be accessible through an online app.