A report posted on social media by China-based blockchain journalist Colin Wu claims block reward miners in China find it more challenging to pay their electricity bill now that local regulators are clamping down on over-the-counter (OTC) brokers.
Although not directly targeted, the clampdown on the exchange of digital tokens and legal currency makes it harder for block reward miners to exchange the digital token they mine into the Chinese Yuan (CNY) in order to pay utility companies. Authorities froze some bank cards, resulting in heavy losses for the block reward miners. This hurdle is leading some to consider moving operations to more digital currency-friendly jurisdictions around the world, such as Kazakhstan.
In Wu’s tweet, he mentions that 74% of the miners he surveyed told him that electricity bills’ payment had been greatly affected. This disruption has yet to affect the daily operations of most block reward miners; only a few mentioned having to shut down ASIC mining machines. Also, some OTC companies that specialize in serving block reward miners allegedly shut down.
Hash power on the BTC network increased by about 20% from a month ago, driven in part by Chinese miners completing their relocation from the southwest to the northwest. While this problem has caused some consternation and headaches within the industry, most block reward miners are still finding ways to sell off tokens.
The new challenges and risk of freezing cards have increased intangible costs for miners. Thomas Heller, COO of HASHR8, told CoinDesk that “many people have had their bank accounts frozen when exchanging crypto for [renminbi] on OTC platforms.”
Most of the world’s largest mining pools are based in China. Government officials in China continue to send mixed messages, either taking an adversarial stance on the industry or turning a blind eye to it.
This dysfunction could partly explain why the number of block reward miners in China has been steadily decreasing. Also, why some block reward miners are shifting their gaze towards countries that regulate block subsidy mining and sanction digital currencies exchanges.
See also: TAAL’s Jerry Chan presentation at CoinGeek Live on The Shift from Bitcoin “Miners” to “Transaction Processors”