China’s Miners Struggle to Pay Power Bills, Regulators Clamp Down on OTC Desks

[bbc.reporter]

Posting this here instead of the press subforum for more awareness. I shall be following this closely and post more updates.

This is certainly another issue that might become more concerning. How the miners in China wish their electricity bills can be paid in bitcoin hehe.



As Chinese authorities make it harder than ever to exchange cryptocurrency into fiat, miners may be forced to move to other jurisdictions, local sources say.

On Monday, crypto industry blogger Colin Wu tweeted that miners in China have been struggling to pay for electricity after the authorities started cracking down on over-the-counter (OTC) brokers in the country.

The tweet notes that “74% of the miners surveyed told Wu that the payment of electricity bills has been greatly affected.”

It’s currently a “challenge” for Chinese miners to convert bitcoin (BTC, +6.10%) or tether (USDT, -0.08%) into yuan because “many people have had their bank accounts frozen when exchanging crypto for [renminbi] on OTC platforms,” said Thomas Heller, formerly global business director at the mining pool F2Pool and now chief operation officer of mining and media firm HASHR8.

In the meantime, some operators are unplugging their miners, Wu wrote in a blog post. “There are also miners who said that their mining machines have been shut down for a month because they cannot sell the cryptocurrency to pay the electricity bill.”

Some OTC companies that specialize on serving mining firms “have also terminated their business,” Wu wrote.

Read in full https://www.coindesk.com/chinese-miners-struggle-to-pay-for-electricity

[avikz]

Does it really matter on whatever is happening in China? It is a country with an authoritarian leadership who are constantly violating the human rights of Uyghurs Muslims and the people of Tibet. Constantly violating the borders of their neighbors and trying to take over small nations like Pakistan and Sri Lanka by giving them loans with exorbitant interest rate that they will never be able to repay!

In 21st century, Chinese people have their own version of Google and Facebook and even Windows operating system! They are soon going to get their own version of government controlled bitcoin. So why do they need bitcoin at the first place? The faster these Chinese miners leave the crypto market, the better! Because in future, the Chinese government will eventually close down all mining firms born and grown on Chinese soil.

[Lucius]

There is nothing strange in this news, if cryptocurrency trading has been banned in China for years, then OTC trading is not exempt from that either. For some reason, the Chinese authorities have only now decided to deal with such a way of selling BTC, thus making it clear to the miners that they are no longer desirable in the country.

I can agree with avikz that this may not be so bad, because there is a perception that there is too much Chinese influence on BTC mining anyway, and that we need more decentralization on that issue. Therefore, it is better for this to happen gradually than for some ban to happen overnight, which has always been an option - because there is no broad and lengthy debate under communism - they make decisions quickly and implement them even faster.

[Erica Jenkins]

I think this problem might be exaggerated, with such bitcoin bull rally there is big demand and I'm pretty sure they can find a solution like selling for cash.

[Bttzed03]

I think this problem might be exaggerated, with such bitcoin bull rally there is big demand and I'm pretty sure they can find a solution like selling for cash.

It could be exaggerated but the Chinese government probably doesn't care about the current bitcoin run. It's either they find a rich individual and trade P2P regularly or move to another jurisdiction where selling bitoin OTC is allowed if this clamping down gets even worse.

I still find it weird that countries like China bans trading but not mining.

[Lucius]

Because they now have "replacement" for Bitcoin which is centralized and controlled by government, even though i'm not sure if it can be called "cryptocurrency".

Has BTC ever been an option at all? I don’t think so, because any form of decentralization in an absolutely centralized state was never out of the question. The CBDC really has the greatest progress in China, and I know they’ve already had a few big tests - I have no doubt that they will implement it and thus control the flow of money even more. They may fear that the Chinese will turn even more to BTC in that case, so they have turned their attention to the OTC market - but they will never be able to prevent p2p.

[n0ne]

As mentioned by avikz what we see with Chinese authority is good to the decentralization of the bitcoin network. China has big hands over the bitcoin network through majority of mining taking place within the country. They have each and everything for their nation leaving the rest of the world. Somehow this isn't too late, because the government is already against the bitcoin as the country is developing their own cryptocurrency.

Someday the network will get under an authority if this continues with majority of the miners being in China. So, now itself the slow and steady spread of miners around the globe will give true meaning for decentralization.

[stompix]

Does it really matter on whatever is happening in China?

Unfortunately, it still does
The last fee spike was caused by the end of the rainy season with miners unable to move their gear or having been cut from cheap coal power, a 16% difficulty drop, 16% lower network capacity and it did affect us all. If they start cracking for real on miners there we might see another serious drop and this time the whole timing would be that of a sci-fi movie, 2013 remake.

But at the same time, the sooner it happens the better, it's time we get rid of this whole thing,  I've had it with their constant banning and unbanning of bitcoin, with the whole drama of Chinese mining gear and pools and manufacturers. The sooner all that gear there is rendered useless and turned into kettles the better, having so much equipment in the reach of a government capable of doing anything to protect their party and their power is not something I want to think of before going to sleep.

I think this problem might be exaggerated, with such bitcoin bull rally there is big demand and I'm pretty sure they can find a solution like selling for cash.

Yeah, I'm pretty sure Star Xu, the CEO of Okex can help them with this. /s

[lifeforcepools]

What are the electricity prices in China? Is it more profitable to engage in mining there?

[Harlot]

Another one reason why Chinese miners needs to go out and look for another country to operate in. What China is doing right now is instead of taking advantage that miners are mostly in China they are doing these things that will just sway them away. Chinese miners have been starting to go out and look for other countries ever since they see their electrical cost in China is too expensive now they gave them an issue about paying their electricity bills which is simply insane. They might regret this later if they continue on doing these kinds of regulations and enforcement that affects them.

[dothebeats]

This opens up a new opportunity for mining firms outside China to start anew. Admit it or not, the hash power has been ridiculously centralized and clumped in the country for a long time and it needs to be distributed. Though the idea of these companies banding together to do some nefarious things on the network is pretty low, preventing even just the idea of it is better than having some regrets later. Also, I think that these same miners would just go somewhere else wherein they can get some pretty decent deals with power companies, or that they will see some OTC brokers outside the country willing to buy their coins to stay afloat. They have connections, and they will surely put it to good use in order to keep on hashing for profits.

What are the electricity prices in China? Is it more profitable to engage in mining there?

For the provinces, yes. Most of China is trying to shift over towards hydroelectricity as a replacement for fossil fuels. Though in particular, can't seem to find any credible sources for the per kWh pricing, but it is safe to assume that it is cheaper than its fossil fuel counterpart.

[Ucy]

It’s currently a “challenge” for Chinese miners to convert bitcoin (BTC, +6.10%) or tether (USDT, -0.08%) into yuan because “many people have had their bank accounts frozen when exchanging crypto for [renminbi] on OTC platforms,” said Thomas Heller, formerly global business director at the mining pool F2Pool and now chief operation officer of mining and media firm HASHR8.

I guess lots of the problems crypto users maybe facing there & other places are due the national laws. I think developers should focus more on building truely decentralized applications that comply with all the good/moral laws of nations in order to make crypto more acceptable to the authorities. . I doubt anyone will reject this (the complying with good national laws), not even the govt, unless they think it's OK to comply with bad/immoral laws.  I wonder if there is anywhere on earth where decentralization, transparency, immutablity, privacy, safety, and other important crypto principles are not considered human rights for innocent & law-abiding people?

[20kevin20]

Oh well, that sucks. But does it surprise any of you? China's been against most things they can't control, so the possibility of miners actually having issues with the Chinese government has always been high imo. They knew it's a Communist Party who leads them, and I doubt the party will ever do anything in the miners' favor. The story might've been different if they could've somehow used mining and hashrate % as a tool of control and surveillance in advantage against other countries. I mean, it's a hassle to handle Bitcoin txs through banks even in democratic countries where freedom is supposed to be a priority.

[BrewMaster]

moves like this have always made things a lot easier and much more profitable for foreign investors. basically anyone who lives outside of their jurisdiction makes the investment to buy ASICs to mine bitcoin inside the jurisdiction with the cheap electricity but they are receiving the coins abroad and sell it abroad and only pay the bills while pocketing the profit.

[CyberKuro]

moves like this have always made things a lot easier and much more profitable for foreign investors. basically anyone who lives outside of their jurisdiction makes the investment to buy ASICs to mine bitcoin inside the jurisdiction with the cheap electricity but they are receiving the coins abroad and sell it abroad and only pay the bills while pocketing the profit.

Ahh of course, this should works. While moving all the ASICs to outside the country will cost a lot, it will be better for them to cooperate with foreign investors or buyers if they can't sell bitcoin through otc desks. There will always a way to move the funds from outside to this country, right?
If this can't solve the problem, china's miners have no other choice but to move the operation site, just like the exchanges did.

[MCDev]

It is very difficult for Chinese miners to win the Bitcoin electricity bill payment struggle. In China bitcoin is accepted as an asset, but it is forbidden to be used as a currency. I think that a totalitarian government like China will not give in to anyone.

[DooMAD]

In 21st century, Chinese people have their own version of Google and Facebook and even Windows operating system! They are soon going to get their own version of government controlled bitcoin. So why do they need bitcoin at the first place?

Why don't you let them decide that for themselves?  Maybe some of them need it because they aren't on board with what their crazy totalitarian leaders are doing.  Maybe it's a statement of resistance on their part.  Or perhaps they have reasons that have nothing to do with your scorn of their government.

I'm guessing there are people in China who probably don't like your government either.  Try to keep things in perspective.  They're just people, like you.

The faster these Chinese miners leave the crypto market, the better!

Good thing it's not up to you, then, isn't it?  You're starting to sound pretty authoritarian yourself when you proclaim that miners from certain geographical regions aren't welcome. 

[2double0]

So, if OTC is being cancelled in their country, does that mean they will not be able to transfer their btc outside their country in an otc deal and get their fiat? They can use many available fiat transfer models to receive Yuan in their account, the big deal though is the conversion rate of 2.5% (forex fee) and they may get less due to being helpless here. Why doesn't China stop the use of btc there totally if they do not want their citizens to get involved? Why are they imposing their own rules on miners? Where is freedom, then? 

[pixie85]

They knew the risk of taking up mining in an authoritarian, socialist country where you can get publicly executed in 21st century.

The demand is so high that even if they're forced out of the country by their government there will be other places that will take over and become the mining hubs of the world.

Another instance of government intervention destroying prosperous businesses and punishing people for choosing an honest trade.

[electronicash]

BTC price had already moon but they can't pay the bills, that's odd. its not like they have no people in US where to send their BTC and exchange their coins and send it back. they can pay their bills but the frozen bank accounts are their problem.  they do have law there so its just that its making them difficult. its the law. they can't get around to it when they need to exchange their money to fiat to pay bills.