Cryptocurrency Companies Leave China in ‘Great Mining Migration’

When China pledged to crack down on cryptocurrency mining in early summer, Nasdaq-listed Bit Digital Inc. stepped up efforts to get its more than 20,000 computers out of the country.

The machines are at the heart of the New York-based company, which makes money by plugging high-powered computers into cheap sources of electricity so they can solve math problems to unlock new bitcoin. The process, called mining, has gone from something any individual with a PC could do a decade ago, to a massive industry that uses many computers and a lot of electricity.

Bit Digital and other cryptocurrency mining companies now face many hurdles when moving their machines out of a country that previously used two-thirds of the world’s energy dedicated to bitcoin harvesting. Machines are prone to damage if shaken, making packing and shipping internationally a daunting task. A single new computer can cost around $ 12,000.

Companies have had to decide whether to move their computers by air or sea, taking into account the cost and time of transport. Bit Digital said it still had 9,484 mining machines, or nearly a third of its computers, in China’s Sichuan province as of June 30. at the end of September, said Samir Tabar, chief strategy officer of Bit Digital. The company ships machines to locations in Nebraska, Georgia, Texas and Alberta, Canada.

The whole process can cost millions of dollars. Oil prices have risen in recent months, and shipping bottlenecks created by the coronavirus pandemic have caused transportation costs to skyrocket. Computers from China entering the United States are also subject to a 25% tariff. In addition to figuring out how to pack and ship machines with care, companies need to find facilities with enough power to move them.