In China, bitcoin mining moguls are scrambling to survive

Mr Gao tells me, “Just because something is not illegal in China, doesn’t make it legal.” He takes a slight pause, a short breath, before leaning emphasis on the final word. Mr Gao is a bitcoin miner, with a few thousand mining rigs of his own, and facilities that he leases out to others. At present he has the capacity for 110,000 new machines, in sites spread throughout China’s sprawling western provinces, Sichuan and Yunnan, and also in the north, in Xinjiang and Mongolia. In other words, despite the precipitous fall in bitcoin’s price over the last 18 months, Mr Gao has been planning to expand.

China has 70 per cent of the world’s crypto-mining capacity, and over 70 per cent of that capacity is nestled in the mountains of Sichuan, where abundant hydroelectric power makes the price per kilowatt some of the cheapest anywhere in the world. But the very existence of this crypto gold rush is under threat. Mining bosses in China are making their millions in a legal grey area – and a new directive issued last week by the The National Development and Reform Commission (NDRC) hints that cryptocurrency mining may soon be outlawed altogether. For those at the top of China’s crypto economy – including the mining moguls I spoke to – this is a clarion call to mine as much money as they can before it is too late.

Miners secure the network for a cryptocurrency, maintaining its infrastructure – its blockchain – by solving a series of complex computational problems necessary to string together transactions in clusters, or “blocks”, which constitute the “chain”. This is what makes cryptocurrencies comparatively decentralised and also theoretically impossible to hack. For their algorithmic chiseling, miners are rewarded with cryptocurrency coins.

In order to keep the rate of coins entering the market steady, the mining process has…

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