Cryptocurrency Companies Are Leaving China in ‘Great Mining Migration’

When China vowed to crack down on cryptocurrency mining early this summer, Nasdaq-listed Bit Digital Inc. ramped up efforts to get its more than 20,000 computers out of the country.

The machines are the heart of the New York-based company, which makes money by plugging the high-powered computers into cheap electricity sources so they can work through mathematical problems to unlock new bitcoin. The process, called mining, has gone from something any individual with a PC could do a decade ago, to a massive industry that uses numerous computers and lots of electricity.

Bit Digital and other cryptocurrency mining companies now face many hurdles as they move their machines out of a country that previously used two-thirds of the global energy dedicated to harvesting bitcoin. The machines are prone to damage if shaken, which makes packing and shipping them internationally an arduous task. A single new computer can cost about $12,000.

Companies have had to decide whether to move their computers by air or sea, factoring in the cost and the length of transportation. Bit Digital said it still had 9,484 mining machines—or almost a third of its computers—in China’s Sichuan province as of June 30. The company has hired large international logistics companies to help move the hardware and hopes they will all be in North America by the end of September, said Samir Tabar, Bit Digital’s chief strategy officer. The company is sending machines to locations in Nebraska, Georgia, Texas and Alberta, Canada.

The whole process can cost millions of dollars. Oil prices have risen in recent months and shipping bottlenecks created by the coronavirus pandemic have caused freight costs to skyrocket. Computers from China entering the U.S. are also subject to a 25% tariff. Aside from figuring out how to pack and ship the machines carefully, companies need to find facilities with ample power to move them to.

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