Can We Compete With Chinese Mining? A Window of Opportunity...
It is argued that due to the prolonged bear market, Bitmain and Canaan world leaders in cryptocurrency mining located in Hangzhou had to scale down. Others have argued that the current administration under President Xi Jinping has been working to dominate the international bitcoin industry by influencing the fluctuation in its value so foreign nations do not see as much profit. Such efforts to dominate have worked against state interest, permitting a window of opportunity for European nations and Canada to gain steam in efforts to strategize expansion of cryptocurrency mining facilities. With China’s drawback in the mining of cryptocurrency this has provided an opportunity for global tech giants and energy-rich nations to enter the race.
With the downsizing of mining efforts in China, this has impacted the bitcoin network’s entire hash rate. When considering that approximately 600,000 to 800,000 bitcoin miners have chosen to shut down since mid-November, the sudden drop has shaken the industry, capturing the attention of big tech companies and competing nations. The bitcoin network saw a fall from 47 million tera hashes per second (TH/s) on November 10th to 41 million on November 24th, approximately dropping by 13%. Experts in the industry suggest, with such a drop the process of mining becomes less difficult but still requires new energy-efficient machinery. The lull in Chinese mining efforts does provide a window of opportunity for global competition but according to crypto experts in China it must not be misunderstood for a lack of interest. Rather an effort to upgrade tool in the mountainous southwest in the provinces such as Xinjiang.
Government Bitcoin Intervention
Researchers out o Princeton and Florida International University completed a recent study suggesting that such efforts to depose of older mining devices is an effort to destroy bitcoin. Under the current administration, evidence has shown the Chinese Great Firewall and the Great Cannon have been designed to slow down the network. Despite accurate evidence within the study, suggestion Xi Jinping’s administrative efforts to weaken any foreign nations ability to complete in mining, has worked against the national interest. The pullback in Chinese facilities has given an opportunity to international competition. There is no doubt the Chinese administration want to lead internationally on blockchain and cryptocurrency efforts but poor judgment in making efforts to weaken global mining show lack of understanding in the interconnection of Beijing thus unable to game an industry to which they play an integral role in.
Intel Mining Efforts
With Chinese companies offloading mining equipment in bulk during November, Intel stepped in to take on the challenge of becoming a leader in the mining of cryptocurrency by filing a patent for energy-efficient high-performance Bitcoin mining. In an effort to provide a more energy efficient alternative, optimized data paths allow the hardware accelerator to implement SHA-256 hashable to reduce energy consumption by 15%. Although in the news media it looks as though government clamp down has made the deposal of machinery a logical response, it was the inefficiency of the mining equipment that was the primary reason.
Competing Mining Nations
Georgia is second to China in mining efforts internationally. Which has given an opportunity to Abkhazia a former territory of Georgia, to benefit from the cryptocurrency miners moving in and building up facilities. Despite fear among energy leaders within the country of potential exploitation of electricity by mining efforts, the poor nation can attract international trade as there is no regulation at present.
Germany is another nation where the private sector has bet long during China’s bitcoin mining dump. Despite government interest to police cryptocurrency, German private equity funds such as Xolaris Group see an opportunity by targeting investors in Hong Kong. Once launching its European mother fund in December, the €50 billion raised will be used to fund expansion to support the Asian fund. The fund sees opportunity in December for more competition to collect the limited supply of 21 million bitcoin. Xolaris continues to manage five other private equity funds regulated as an alternative investment as defined by the German Financial Supervisory Authority. Despite much media focus on the dumping of mining machinery in China, there must be greater attention given to the opportunity to attract investment from the popularity of crypto among the Chinese populace.
Canada has also seen opportunity, in China’s pullback. The province of British Columbia has ideal environmental conditions for cost and energy efficient mining. There has already been much success for mining farms in Ocean Falls and Houston which once depended heavily on the lumber industry for its economic strength. With government support in finding alternative energy initiatives, a discounted electricity rate has been offered to attract international business to the region. For the nation, mining growth in British Columbia would be greatly beneficial to the Toronto start-up scene that predominately focuses on business and product development. Considering the growth in investor interest for climate change-related blockchain projects BC can provide many successful use cases as the government pursues the potential of connecting crypto mining to the pulp, paper and lumber industries to bring mutual benefit.
Written by Shermineh Esmati
As the CEO and founder of Cyrus BC Inc. Shermineh provides advisory services to promote the interests of her clients through the application of innovative products. One focus of Cyrus BC is to bring deliverable blockchain initiatives to the attention of investors focused on the security and socio-economic benefits of the technology.
With a background in foreign policy and intelligence analysis, Shermineh has been using her grasp of geopolitics to aid blockchain companies to best pursue growth while respecting international cryptocurrency regulations and blockchain policy. To ensure the expedited adoption of fintech products she is working with Blockchain Intelligence Group, New Economies DLT and building collaborative efforts for AI blockchain projects soon to be announced.
Shermineh has experience advising intelligence agencies, political leaders, management consultancies and human rights organizations. In the pursuit of developing an expertise in international security, Shermineh obtained her bachelor’s degree with a Specialist in Political Science at the University of Toronto and is completing her master’s degree in Government at Harvard University. To further Canada’s efforts in emerging technology she is also a member of the Blockchain Association of Canada and an Advisor to the Open Source Data Committee at the Treasury Board Secretariat in Ottawa, Canada.