BTC.com, one of the largest bitcoin mining pools, ranked 5th in hashrate, starts leaving the Chinese market from this Friday (15th), as announced by its operator, BIT Mining, a company listed on the Stock Exchange of New York. According to the official note published on Thursday (14), the reason for leaving the Asian country is to comply with local regulations.
“BTC.com will discontinue registration of new Mainland China users and expects to begin canceling existing Mainland China users’ accounts in an orderly manner from October 15, 2021,” says the statement from BIT Mining.
Also according to the company, the discontinuation of the BTC.com service for users in China should impact the company’s revenue. That’s because the subsidiary is a business conglomerate such as pool, browser, cryptocurrency merchant.
The company concluded by stating that BTC.com recently signed a contract to acquire a mining machinery manufacturer with the aim of increasing its self-sufficiency and strengthening its competitive position. BTC.com is responsible for 9% of all bitcoin mining; in 2018 it came to lead the sector with 28.2% of the network’s total hashrate.
Antpool will no longer serve China
Also on Wednesday, Bitcoin hashrate giant Antpool warned the Chinese market that it would no longer offer its services. As of this Friday, the note says, the company begins a transition to “complying with relevant Chinese government regulations” and ordering its global customer base. For this, the company published the first two measures:
Online KYC (Know Your Customer) verification system, global authentication of registered users to help users comply with the laws and regulations of their location; And the blocking of IPs from China, with the exception of Hong Kong and Taiwan.
Cryptocurrencies in China
Last month, the Chinese government started a new wave of crackdown on cryptocurrencies in the country, continuing the bans it has imposed on the sector in the past, banning mining, trade and access to the financial system of intermediaries.
With the imposition of the Chinese government, at least four of the largest mining companies operating in the country have already left the Asian region — Bee Pool and Spark Pool, respectively fourth and second largest mining pool in Ethereum, until then, had been the last to decline the doors. Now, the country’s judiciary is studying how to prosecute and sentence users of cryptocurrencies.
The action of the Asian country causes miners to migrate to the United States and other countries in the West. In fact, according to a recent Cambridge University study, the US has become a global leader in the Bitcoin mining industry.
Bitcoin mining: Kazakhstan suffers power grid issues
- Bitcoin mining causes power grid issues in Kazakhstan
- Bitcoin mining hashrate is up in the country
- Mining companies are leaving South Kazakhstan
Besides trading digital assets, Bitcoin mining is another way to make huge profits in the crypto market. But the activity is not for the faint-hearted they need a lot of resources to pull it off and offer services to crypto traders. When China announced that digital assets mining had been banned in May, many people were hoping it was like the previous ban. This is because the country had tried at one point and failed as miners continued their activities. However, the miners moved their operations out of the country into other states, with Kazakhstan being a major welcoming party.
Kazakhstan’s Bitcoin mining hashrate skyrockets
With the way things are looking, Kazakhstan is feelingl the heat from presence of Bitcoin mining activities. According to a recent report, the government announced a cap on the amount of electricity they would expend and even had to seek auxiliary from its neighbor, Russia. Although, it has put Kazakhstan on the map as the country now boasts 18% of the entire Bitcoin hash rate worldwide.
Before now, Kazakhstan was only responsible for about 8% since the start of the year. Kazakhstan has cemented its place in the top three countries with Bitcoin mining presence, the U.S and Russia in first and third place at 35% and 11%, respectively. However, the statistics above do little justice to how far crypto and Bitcoin mining has overtaken Kazakhstan this year.
Mining companies are leaving South Kazakhstan
Since the previous report by the Cambridge Bitcoin Electricity Consumption Index, Kazakhstan’s hash rate has climbed a further 43%. Although all things went quiet after miners shut down their rigs and leave China, things are taking shape with the figures returning to April’s position. Even if Kazakhstan’s hash rate remained unmoved during the period, it would now be around 28.2 TH/s instead of 19.7 TH/s.
Putting it into perspective, one mining rig belonging to Xive that had to go offline in South Kazakhstan would have made about 57,500 TH/s. According to a recent statement from Xive boss Didar Bekbau, the situation in the country is very real, and miners have started to source power elsewhere asides from the power grid.
After the statement, a video on Twitter to showed Xive packing up its Bitcoin mining equipment and leaving the area. One of the reasons this has happened is that miners are looking for cheap energy to carry out their activities. Kazakhstan hopes that crypto mining might increase the inflow of cash into its purses by $1.5 billion in five years. However, it notes that most of these crypto and Bitcoin mining companies are not licensed to operate.
StormGain promises bitcoin mining in the cloud, but doesn’t pay users
Mining bitcoin by mobile, without wasting battery and CPU, quickly and profitably. All alarms point out that StormGain’s operation is classic “too good to be true”.
The miracle being propagated is already starting to create problems, with dozens of claims of blocked money and insurmountable barriers to real profits.
Due to the high cost of electricity, mining the world’s main cryptocurrency has become an impossible or unprofitable task even for those who have immense computational power at their disposal.
But suddenly you can do it from your cell phone, earning up to 0.0318 bitcoin per day, which at the time of production of this text is equivalent to R$ 10 thousand.
That’s the promise of broker StormGain, which explores a concept of mining through the cloud.
The explanation of how this is possible is vague: “Cloud Mining runs on equipment owned by StormGain and does not use the resources of the user’s device, ie the device’s CPU, battery, graphics cards or other hardware resources. Users can manage and view transactions only through the StormGain cloud mining app.”
StormGain on Reclame Here and on Reddit
Reddit users who claim to have used the app, say that every four hours you must enter the app, press a button and that’s it. You are “mining” bitcoin.
According to the company, after having mined the equivalent of at least 10 dollars in Bitcoin, the user can withdraw the amount within 72 hours. There seems to be the problem.
A client of Juiz de Gora (MG) reported on the Reclame Aqui website that it is practically impossible to reach a proposed level of US$30 within the stipulated time; when the miner arrives, the “deadline” has expired and the withdrawal cannot be made.
“The first US$ 10 that are retained, we can get it quickly. After that, mining only starts to decline and sometimes even regresses. It’s impossible to reach US$ 30 before it expires”, he says.
Another client, this one from Londrina (PR), says: “I carry out mining on this application, but the values disappear and I never manage to reach 10 dollars”.
A point raised by Reddit users is that the company separates its customers into tiers and those who have more money in their accounts have greater speed in alleged mining.
It turns out that bitcoin mining is influenced only by the computational power that is employed in it, having nothing to do with the amount of money or even BTC that someone has.
O Bitcoin Portal contacted StormGain, but has not received any feedback as of this writing.
Expert analyzes StormGain
Mining expert Denny Torres spoke to the Bitcoin Portal about the operation. First he explains: what exists is to operate rigs remotely through a cell phone application. The mining itself, always who do it are the physical boards that are wasting computational energy.
“I can’t talk about this specific site because I don’t know all the details. But in their model you have to put in money, supposedly for them to equip, and you ‘have a rig’. Economically it is not a viable operation. The cost that the company has to buy a rig, the necessary payback, maintenance, cleaning, and then having to share what these partners/customers would be. It doesn’t close”, he says.
Torres says that this type of operation takes place when there is a very large base of trust. “I know a group of people who live in the US and have relatives in Brazil. People here send money to buy equipment and monitor the rigs from a distance. Relatives in the United States earn a fee. But it works because it is a huge base of trust, between relatives”, he says.
Speech also comes from personal experience. Torres remembers that in 2017 he put money into Hash Flare’s “cloud mining” in a very similar scheme to Storm Gain’s and never managed to get the money out again. “Many people and I lost the money placed there,” he says.
Foundry USA becomes second-largest Bitcoin mining pool amid China ban
Data from BTC.com shows that Digital Currency Group-owned Foundry USA stands behind the pool leader AntPool by a hash rate of just 4,000 PH/s, which contributed to a 17.76% network share at the time of writing.
The rise in the participation of American entities can be attributed to China’s recent blanket ban on crypto trading and mining activities. The ban forced a large-scale migration of local Bitcoin miners, who now reside in crypto-friendly jurisdictions including the United States, Russia, and Kazakhstan.
According to https://t.co/1YRYr4QCmY, DCG's mining pool Foundry has become the second largest Bitcoin mining pool. China's severe crackdown on Bitcoin mining and the transfer of mining industry to the United States are the core reasons. https://t.co/VjtWgD9Hsp pic.twitter.com/XK9Y19QDrg— Wu Blockchain (@WuBlockchain) November 20, 2021
Out of the top five mining pools in terms of hash rate distribution, Foundry USA charges the highest average transaction fees of 0.09418116 BTC (nearly $5,500) per block. American businesses have also picked up China’s slack in terms of crypto ATM distribution.
Coin ATM Radar data shows that Georgia-based Bitcoin Depot has overtaken its Chinese counterparts to become the world’s biggest crypto ATM operator. Interestingly enough, a majority of the crypto ATM operators are run by American companies, a trend more prominent after China’s proactive ban on crypto activities.
Despite the clear intent to pursue an in-house central bank digital currency (CBDC), the Chinese Communist Party has also sought public opinion on the Bitcoin mining ban on Oct. 21, which has sparked conversations around the amendment of the government’s negative stance on Bitcoin and cryptocurrency mining activities.
However, Statista’s data confirms that China’s contribution to the Bitcoin mining hash rate has been on a steady decline since September 2019. Two decades ago, China represented over 75% of Bitcoin’s mining hash rate, which by April 2021 reduced to 46% prior to banning cryptocurrencies.
As the United States inches towards Bitcoin’s mainstream adoption, the regulators seek clarity in relation to the new reporting requirements put forth by the Biden administration.
Members of the Republic and Democratic party have appealed, in different occasions, to amend the crypto tax reporting reforms along with a plea to redefine the word “broker” in crypto transactions.
Starting from 2024, the bipartisan infrastructure bill requires the general public to declare digital asset transactions worth more than $10,000 to the Internal Revenue Service. The bill currently considers miners and validators, hardware and software developers and protocol developers as brokers.