Bitmain, a leading producer of Bitcoin (BTC) mining hardware, went into effect Monday. The company announced in a statement released in Beijing on Sunday.
The company said its decision came from the need to comply with government regulations. However, it will continue to serve overseas markets as usual.
This decision will not come as a surprise to many in the crypto industry. China currently has restrictive policies targeting this sector. Bitmain’s decision is indicative of the cost of China’s anti-crypto crisis on operations in the region.
Bitmain is having major problems internally. Profitability has fallen since 2017. At that time, the domestic market accounted for up to 50% of the profits. That number fell to 40% in 2018.
Is Bitmain preparing to leave Beijing?
Analysts believe the decision will not have a material impact on the company’s earnings. It is clear, however, that this could mean his departure from China.
The decision caused mixed reactions on Reddit. Redditors like Danielrayson believe the solution will kill BTC. But another user, BKCrypt01, believes it will benefit everyone. The Redditor confirmed that Bitmain could focus on serving other crypto-friendly regions.
One area that will benefit from this development is North America. As China stepped up its crackdown on cryptocurrencies, it emerged as an alternative investment destination. The region not only has less restrictive laws, it also offers plenty of clean and affordable energy.
This is an opportunity that Bitmain has not yet taken. Last month, he closed a deal to supply ISW Holdings (BlockQuarry) with 56,000 BTC miners for his Georgia mining company. The latter predicts monthly sales of more than $10 million by October next year.
China’s crypto space is shrinking
The repression of crypto in China has been going on for some time. It cites two main reasons. First, he thinks crypto is speculative and therefore disrupts his economy. Second, bubbling sector demand is weighing on its current capacity.
Therefore, the state has issued a decree gradually limiting freedom in this area. Its latest attempt is to put cryptocurrency mining on its 2021 negative market entry list.
The list describes sectors of the Chinese economy where the government has banned investment. It is a solution that effectively reveals the demise of crypto mining in the country.
For this reason, many companies have decided to relocate their operations. The crypto-supporting regions they migrated to include Singapore and Hong Kong.
Popular cryptocurrencies Binance and Houbi forced at least 20 other companies to relocate their operations. Others include Spark Pool, Ethereum’s premier mining pool, and Powercrypto Holdings. And now Bitmain has joined them.
China’s crypto industry is barely holding back
Bitmain can take comfort in the fact that the regulations don’t prohibit the manufacture of hardware. This means they can still make them, but not for home use. It is unclear where Beijing will target the next crypto attack.
Despite growing restrictions, Chinese crypto enthusiasts have found a way to sustain their efforts. Today the extraction is private and small. They use highly portable graphics processors (GPUs). They also use virtual private networks (VPNs) to disguise the identity of users.