[2021-09-04] BBC.com Why China's bitcoin miners are moving to Texas

[n0nce]

Poolin is the second largest bitcoin mining network in the world, with most of its operations in mainland China.[...]
"We decided to move out, once [and] for all. [We'll] never come back again," Mr Pan told the BBC. [...]
the Poolin executives are among the many bitcoin miners who have recently landed in a place reputed as part of America's wild wild west: Austin, Texas

Texas has some of the cheapest energy prices in the world, due to its deregulated power grid. Consumers enjoy more choices of electricity providers, which encourage providers to lower prices to stay competitive. During peaks of electricity demand, bitcoin farms can even sell unused power back to the grid.

Damn, they go back-and-forth between wanting and not wanting crypto. Seems miners now get so sick of it that they actually move all their stuff halfway across the globe to continue their operations long-term.

> https://www.bbc.com/news/world-us-canada-58414555

Here's a timeline of China's relation with crypto:
https://www.cryptovantage.com/guides/history-of-crypto-in-china/

[SFR10]

Damn, they go back-and-forth between wanting and not wanting crypto. Seems miners now get so sick of it that they actually move all their stuff halfway across the globe to continue their operations long-term.

In the past few months, I've read so much conflicting news from in and out of China that I'm no longer sure which one I should trust... Some of them mentioned they're allowed to continue their operations if they'd use renewable energy sources while other sources said, mining operations are banned as a whole!

• Does anybody know a website that shows the percentage ^[roughly] and locations of miners who have migrated to other places ^{[not just the country name]}?

[n0nce]

Damn, they go back-and-forth between wanting and not wanting crypto. Seems miners now get so sick of it that they actually move all their stuff halfway across the globe to continue their operations long-term.

In the past few months, I've read so much conflicting news from in and out of China that I'm no longer sure which one I should trust... Some of them mentioned they're allowed to continue their operations if they'd use renewable energy sources while other sources said, mining operations are banned as a whole!

• Does anybody know a website that shows the percentage ^[roughly] and locations of miners who have migrated to other places ^{[not just the country name]}?

That's true, indeed. Firstly, there was a big hype on Twitter saying 'oh nice now mining will be much more decentralized'. Then I read that miners prefer to wait to see if the decision is revised (since it happened before in the past), and now today I read this article.

It would really be cool to have some actual numbers. I mean it should be possible to track IPs of large mining pools, or not? Something similar to https://bitnodes.io/ but for miners?

[bbc.reporter]

Does this imply that the enforcers and the policy makers of Beijing can comedy ban and unban bitcoin again? It appears that they might have discovered that the bitcoin ban fud was more powerful than the real bitcoin ban hehehe.

[SFR10]

I mean it should be possible to track IPs of large mining pools, or not? Something similar to https://bitnodes.io/ but for miners?

I didn't know the answer to that, so I googled and found the following link that says "it's not possible": Finding IP addresses of all bitcoin miners

Does this imply that the enforcers and the policy makers of Beijing can comedy ban and unban bitcoin again?

I don't think they'll be lifting the ban anytime soon ^{[especially because of their own CBDC]}, hence the large-scale migrations.
^{- I remember reading about limiting the amount each individual could have/use [they can't implement such a thing with BTCitcoin].}

[n0nce]

I mean it should be possible to track IPs of large mining pools, or not? Something similar to https://bitnodes.io/ but for miners?

I didn't know the answer to that, so I googled and found the following link that says "it's not possible": Finding IP addresses of all bitcoin miners

Right, makes sense - since blocks are submitted to the blockchain directly we can't know what IP they originate from. Smart!

Does this imply that the enforcers and the policy makers of Beijing can comedy ban and unban bitcoin again?

I don't think they'll be lifting the ban anytime soon ^{[especially because of their own CBDC]}, hence the large-scale migrations.
^{- I remember reading about limiting the amount each individual could have/use [they can't implement such a thing with BTCitcoin].}

Yeah, I think in China you are limited to a certain amount of foreign currency. As far as I know it's 10,000$ for USD.

[Karartma1]

Despite the repeated blackouts that hit Texas last winter, due to the scarcity of energy reserves, the state presents energy prices that are among the lowest in the world: it's also focusing on renewable energy, so much so that its share in the market is constantly growing: already in 2019, 20% of electricity was from wind power. Texas also has a deregulated market that allows customers to choose their electricity providers and, more crucially, Texas leaders have a very lenient attitude towards fans of the crypto world.
If I was mining, I'd go there too.

[UKprod]

Doesn't really surprise me since China has been very confused with the regulations that it wants to place for crypto currencies. Hence, it's natural for miners to decide to move to some other country that doesn't just throw people under the bus for mining. Hence, Texas would obviously be one of the good choices owing to its electricity policy and the outlook towards crypto.

[NeuroticFish]

since blocks are submitted to the blockchain directly we can't know what IP they originate from. Smart!

Besides, most miner join pool and usually pool is the one who broadcast the block. But it's likely pool could generate such statistic, unless their privacy policy doesn't log IP or remove IP after few months.

Exactly.
The only "metrics" would be the changes in the hash rate and whatever the mining farm owners are declaring. Way to small and scarce information and possibly not very reliable also.

Austin, Texas

I find it quite an odd place to move. I don't know what would be the status for the hardware (do they have to pay import tax?) and what would be the taxes to be paid in US for the operations (aren't they higher than in other places?)

And something else: will the "Bitcoin mining is centralized in China" narrative get replaced by "Bitcoin mining is centralized in United States" (narrative)?

[stompix]

Austin, Texas

I find it quite an odd place to move. I don't know what would be the status for the hardware (do they have to pay import tax?) and what would be the taxes to be paid in US for the operations (aren't they higher than in other places?)

There are a lot of things that mitigate the import taxes and other labor costs.
One is section 179,

Jan 6, 2021 – The Section 179 deduction for 2021 is $1,050,000 (up from $1,040,000 in 2020). This means U.S. companies can deduct the full price of qualified equipment purchases, up to $1,050,000, with a “total equipment purchase” limit of $2.62 million (up from $2.59 million in 2020). The deduction includes both new and used qualified equipment.
In addition, businesses can take advantage of 100% bonus depreciation on both new and used equipment for the entirety of 2021.

How does a 100% deduction for up to 2.6 million (that's around 300 ends of the line Asics if you know how to negotiate) a year sound? And it is also extended to used gear so it means you can simply import those from a Chinese miner once you set up an LLC and almost not care about throwing them out of the window when they become obsolete.  Set up a few LLC, do a bit of tax...improvements by arranging a few deals between them and you will end with a better profit after tax than anywhere in the world.

Plus, Texas has a lot of cheap power, the average price for energy over the state doesn't matter, most deals are made well under the commercial rates, most of the time closer to 2-3 cents rather than the 7c average for the state.

And something else: will the "Bitcoin mining is centralized in China" narrative get replaced by "Bitcoin mining is centralized in United States" (narrative)?

Miners will always migrate to the best country for their business, centralization is unavoidable no matter what anyone would try to do.
But at the end of the day, if you could choose the location of 51+% of the hashrate what would you pick? Texas, Russia, or China?

[n0nce]

Miners will always migrate to the best country for their business, centralization is unavoidable no matter what anyone would try to do.
But at the end of the day, if you could choose the location of 51+% of the hashrate what would you pick? Texas, Russia, or China?

I think that highly depends who you ask
Probably, Russians would prefer Russia, while Americans would prefer Texas.
In the end, no matter where 51% of the hashrate will end up, it'll always be quite a bad thing. Bitcoin is meant to be decentralized.

On the other hand, full nodes can reject blocks, so I guess it's not as bad as long as nodes are well decentralized, but it would be better to have decentral mining as well..

[NeuroticFish]

How does a 100% deduction for up to 2.6 million (that's around 300 ends of the line Asics if you know how to negotiate) a year sound? And it is also extended to used gear so it means you can simply import those from a Chinese miner once you set up an LLC and almost not care about throwing them out of the window when they become obsolete.  Set up a few LLC, do a bit of tax...improvements by arranging a few deals between them and you will end with a better profit after tax than anywhere in the world.

This sounds interesting indeed. I didn't know. Of course, they'll have to know how to do it, but with the amount of money involved, I'm sure that they'll find somebody help them out.

will the "Bitcoin mining is centralized in China" narrative get replaced by "Bitcoin mining is centralized in United States" (narrative)?

Miners will always migrate to the best country for their business, centralization is unavoidable no matter what anyone would try to do.
But at the end of the day, if you could choose the location of 51+% of the hashrate what would you pick? Texas, Russia, or China?

Clearly, all businesses go where it's better for them, usually where they'll earn more. My question was not really serious.
But, as said, better is, even for Americans, that the hash rate is not centralized (although one cannot actually know if it's centralized or not).

[stompix]

I think that highly depends who you ask
Probably, Russians would prefer Russia, while Americans would prefer Texas.

Doubt it, the amount of Russians holding their savings in euros and dollars tells me they wouldn't want their government to have too much of a say in bitcoin either. No matter how stupid a texas governor could be it would still be safer than what could come from Putin.

On the other hand, full nodes can reject blocks, so I guess it's not as bad as long as nodes are well decentralized, but it would be better to have decentral mining as well..

That would open another Pandora's box on top of the mining cartel one

This sounds interesting indeed. I didn't know. Of course, they'll have to know how to do it, but with the amount of money involved, I'm sure that they'll find somebody help them out.

Indeed, it's not like all the Chinese companies and miners are migrating to other places, a lot of them are just dumping the gear and some new companies run by americans are taking their place, the usual examples of large farms moving are mostly made out of companies who already had a footing in other countries, not ones that were ignorant of the rest of the world before so they know pretty well how to take advantage of the legislation. Bitmain has tried at least three times in the past to start partnerships in both the US and Canada and the rest are no beginners either.

Bottom line, I don't see the small Chinese miner with 1-5 PH of hashrate moving to another country, it's the big players and those do have the money and knowledge for these otherwise they wouldn't have grown that big to date either.

[n0nce]

That would open another Pandora's box on top of the mining cartel one

Now that I think about it... What stops anyone from buying 20,000 Raspberry Pis for the measly sum of ~1,000,000$ and running a modified version of Bitcoin Core on them that follows a different set of rules? Like, they would have the majority of votes compared to the ~10,000 currently deployed nodes.

[stompix]

That would open another Pandora's box on top of the mining cartel one

Now that I think about it... What stops anyone from buying 20,000 Raspberry Pis for the measly sum of ~1,000,000$ and running a modified version of Bitcoin Core on them that follows a different set of rules? Like, they would have the majority of votes compared to the ~10,000 currently deployed nodes.

Nothing. The minor flaw in this plan is that you will also need a lot of different IPs.

Bitcoin makes these attacks more difficult by only making an outbound connection to one IP address per /16 (x.y.0.0).

Of course, you can order at anytime 1 million VPS with different IP classes, 1000 from each different ISP from different countries, it's all a question of how much time and $ you're willing to spend.
But...why do it? 

[n0nce]

That would open another Pandora's box on top of the mining cartel one

Now that I think about it... What stops anyone from buying 20,000 Raspberry Pis for the measly sum of ~1,000,000$ and running a modified version of Bitcoin Core on them that follows a different set of rules? Like, they would have the majority of votes compared to the ~10,000 currently deployed nodes.

Nothing. The minor flaw in this plan is that you will also need a lot of different IPs.

Bitcoin makes these attacks more difficult by only making an outbound connection to one IP address per /16 (x.y.0.0).

Of course, you can order at anytime 1 million VPS with different IP classes, 1000 from each different ISP from different countries, it's all a question of how much time and $ you're willing to spend.
But...why do it? 

For example censorship; stop relay of certain transactions etc., that's why we need many independent nodes everywhere on the globe

[Woodie]

One this is certain about crypto mining in China,  it's never going back to that place because it's long term sustainability policies are advocating for cleaner sources of energy and reduction in carbon emissions and unfortunately most crypto mines do the opposite of how energy is generated to power up these mining farms. But if the USA is the best mining destination and has no regulation that will be disadvantaging these guys this could be a win for the crypto ecosystem, and thanks to competition miners have been spoiled for choice.