The price of Bitcoin and other cryptocurrency has fallen sharply over the last month, with the combined cryptocurrency market losing around $1trillion in value. Bitcoin dropped from over $60,000 (£42,200) to under $35,000 (£24,720) from mid-April through to mid-May and has failed to recover since with Tesla CEO Elon Musk suggesting in a tweet today he was ending his relationship with the cryptocurrency. Experts have been dissecting the crash, with many pointing to the tech billionaire’s love of rival token Dogecoin as being one influencing factor.
But on May 21, China also announced it would start to “crackdown on bitcoin mining and trading behaviour,” which is believed to have played a huge role too.
According to the University of Cambridge’s Centre for Alternative Finance, over 65 percent of miners working on the Bitcoin blockchain were based in China as of April 2021.
And Robert Van Kirk, managing director of US-based tech company Kaboomracks, says miners are now frantically “fire selling” their equipment.
He said: “People mining there have realised that it may now be a riskier proposition to operate in China than they had anticipated. They may be leaving, regardless of whatever determination is made.”
As a consequence, Mr Van Kirk says, used mining rigs are now being sold at a steep discount, in some cases as much as 40 percent lower than the usual price.
But some are apparently looking to set up shop elsewhere.
A source familiar with China’s Bitcoin mining industry told Wired that some miners are transporting their machines to neighbouring Kazakhstan “overnight”.
Those who could not afford a quick move are said to be planning to wind down their large mining farms and continue their mining elsewhere.
Didar Bekbauov is the founder of Kazakhstan-based Xive, a company that helps miners find space and convenient energy contracts in China.
Mr Bekbauov has claimed he has been receiving daily enquiries from Chinese miners looking to relocate.
He said: “These people are waiting for some clarification from the Chinese government, and they are looking for a plan B in case the government restricts or somehow bans mining altogether.”
Kazakhstan currently accounts for over six percent of the world’s mining and is endowed with cheap coal-produced energy and a relatively cold climate.
It also borders China, and especially the Xinjiang region, where over a third of China’s mining takes place.
Experts are now tipping Kazakhstan to increase its global share of mining.
Britain’s Financial Conduct Authority (FCA) has previously warned investors of the risks that come with investing in cryptocurrency.
They said: “If consumers invest, they should be prepared to lose all their money.
“Some investments advertising high returns from crypto assets may not be subject to regulation beyond anti-money laundering.
“Significant price volatility, combined with the difficulties valuing [Bitcoin] reliably, place consumers at a high risk of losses.”
Express.co.uk does not give financial advice. The journalists who worked on this article do not own cryptocurrency.