The Chinese government has made it clear that cryptocurrencies will not be part of its economic future. With the government looking to map a course forward, companies in the industry understand that China might be too far gone.
Now, one of China’s biggest crypto giants - Bitmain - appears to have joined a number of companies ready to ditch China.
China’s Campaign Against Crypto Finally Hits Mining Too
Earlier this month, Bitmain confirmed it would stop shipping crypto mining rigs to mainland China. In an official press release, the crypto mining giant explained its decision to halt all shipments from October until further notice.
In its announcement, Bitmain explained the decision was due to the Chinese government’s policy on cryptocurrencies. Recall that, late in September, the People’s Bank of China (PBoC) announced a collaborative effort with ten other government oversight agencies - including the Cyberspace Administration of China and the Ministry of Public Security - to outlaw all operations and transactions involving cryptocurrencies.
The Chinese government’s action marks the most comprehensive ban on crypto operations ever. While digital assets haven’t been allowed to operate freely in China since 2017, the mining space has, so far, been left alone - primarily due to the size of Chinese-native mining outfits including, and especially, Bitmain. But, with the circular released last month, the Chinese government has drawn a clear battle line.
In its press release, Bitmain explained that its operations in mainland China would stop entirely. The firm added that its staff would contact companies and mining outfits that had paid for long-term deliveries and contracts in mainland China to discuss alternative solutions.
While its plan to help existing Chinese users remains unknown, Bitmain has committed to continue supplying its mining rigs to users worldwide - including disputed territories like Taiwan and Hong Kong.
Bitmain added that it would increase its production capacity to counter the slowdown in orders from China, which had previously been its primary market. This increased production will especially affect Antbox, the company’s mobile mining containers. Bitmain will also focus on green mining initiatives, starting with its commitment to host the World Digital Mining Summit 2021 in Dubai next month.
With the Dubai summit, Bitmain planned to focus on green mining opportunities and initiatives in Chinese provinces like Xinjiang and Yunnan. It is unclear how the company plans to move forward with these initiatives, given that mining is no longer allowed in China.
No Help from Fellow Tech Giants
There is no doubt the Chinese crypto ban will hit Bitmain especially hard. The company just fought through a civil war, and 2021 has been a rather challenging year; just as it was turning a corner, this new issue arose.
It is especially difficult, as the firm cannot get its products into mainland China by any means. E-commerce companies have also cut ties with mining gear; Alibaba announced just days after publication of the Chinese government’s circular that it would close all sales for cryptocurrency materials.
The Alibaba announcement made it clear the e-commerce giant had no plans of facilitating the sale of anything even remotely related to crypto. The company said sales of cryptocurrency courses, materials, mining rigs, and more would be closed completely. Anyone found violating this policy will face stern penalties, including blacklisting from the platform and freezing of merchant accounts.
It’s understandable that tech companies want to distance themselves from crypto. The Chinese government has enforced a sweeping crackdown on tech firms this year, with Alibaba the poster child of the Communist Party’s campaign against big tech.
Doing anything to anger Beijing is not a path any tech company wants to tread.
The United States’ Welcoming Arms?
With Bitmain taking its hands off of mainland China, there is the question of where the company could go next. The company can continue serving its broad and ever-expanding network of partners but will need a base of operations.
So, why not the United States? Bitmain already has a history in the United States, with the company’s plan to build one of the world’s largest mining facilities in Texas. Sadly, this did not happen, as the firm and its partner - Vancouver-based DMG Blockchain - canceled their operating partnership back in January 2020 due to cost and material inefficiencies.
Interestingly, states like Texas and others are even riper for cryptocurrency mining than in early 2020. Regulations are more favorable to mining, and the factors are looking quite attractive. If Bitmain tires of looking for a base, the United States could be the perfect place to land.