The ongoing assault on money laundering in the Chinese telecoms and crypto industry has seen Bitcoin miners facing difficulties in paying electricity bills as banks freeze cards associated with cryptocurrency transactions.
Three-quarter of Chinese Bitcoin Miners Can’t Pay for Electricity
According to a local news outlet, in a tweet thread on November 16, 2020, Chinese miners were reportedly experiencing difficulties in paying electricity bills. The outlet was able to survey 74% of Bitcoin miners in China, who revealed that they faced such problems.
The difficulty in paying electricity bills was a result of the card freeze wave experienced in China. At the beginning of 2020, the government of China took a more drastic approach towards combating money laundering and illegal activities, specifically targeting the cryptocurrency and finance industries.
Whereas other Chinese crypto participants can keep their holdings in stablecoins in lieu of the yuan, miners need access to RMB for bill payments and other operational expenditures. This lack of access to fiat is yet another impediment for Bitcoin miners in the country in addition to other problems like seasonal flooding, supply shortages due to COVID-19, among others.
Following the May 2020 halving, the block reward became 6.25 BTC, a 50% decrease from the subsidies earned over the last four years. With the reduced earnings per block, mining operations are reportedly pursuing greater efficiency to offset the decreased revenue.
Will Hash Power Migrate Out of China?
While China is still the leading country in terms of global bitcoin hash rate, the latest development coming out of the country could see local miners migrating to more favorable regions. According to data from the Cambridge Bitcoin Electricity Consumption Index (CBECI), China leads the BTC mining sector with 65.08%, with the U.S. and Russia in second and third place respectively at 7.24% and 6.90%.
As reported by CryptoPotato back in June, the U.S. BTC hash rate rose 78.33% between September 2019 and April 2020. Meanwhile, China has experienced a decline within the same period.
While Chinese miners are having difficulty paying electricity bills, Russia might legalize BTC mining. Back in September, reports emerged that Russia’s Ministry of Finance was considering authorizing bitcoin mining in the country.