The landscape of global cryptocurrency mining is undergoing a significant transformation. Recent regulatory changes in key regions have prompted mining enterprises to seek new bases of operation overseas. Leading this shift are established players like Bit Mining (BTCM.US), a NASDAQ-listed company, which has started relocating its mining hardware to countries such as Kazakhstan and the United States.
This strategic move not only highlights the adaptive nature of the crypto mining industry but also underscores the growing importance of sustainable energy and favorable regulatory environments in selecting mining locations.
Relocation of Mining Operations to Overseas Facilities
On June 21, Bit Mining announced the arrival of its first batch of cryptocurrency mining rigs in Kazakhstan. This initial shipment included 320 machines with a total hash rate of approximately 18.2 PH/s. They are expected to be fully deployed and operational by June 27. Furthermore, the company confirmed that a second and third batch, comprising 2,600 additional miners with a combined hash rate of about 102.3 PH/s, are scheduled to arrive before July 1. The remainder of the company's owned equipment is also being shipped abroad in phases.
This relocation wave comes after the comprehensive suspension of cryptocurrency mining activities in major Chinese mining hubs like Sichuan, Xinjiang, and Yunnan. The new regulations have profoundly impacted the global distribution of mining power. Data from BTC.com shows significant drops in the hash rates of major mining pools over a week. For instance, AntPool's hash rate fell by nearly 5,000 PH/s, while pools like ViaBTC, Poolin, and F2Pool also saw declines of over 2,000 PH/s each.
The BTC.com pool, now operating at a yearly low with its share of the global hash rate at 8.08%, exemplifies this shift. Companies that quickly secure overseas hosting solutions are poised to recover their operational capacity more rapidly.
Strategic Investments in Kazakhstan and Texas
Bit Mining's global strategy involves establishing firm footholds in two key locations: Kazakhstan and Texas, USA.
Kazakhstan Investment:
On May 24, Bit Mining entered into a binding investment term sheet with a local Kazakh company. This agreement outlines plans to jointly develop a new cryptocurrency mining facility, a large data center projected to have an operational load of 100 MW. Bit Mining committed to investing 60 million RMB (roughly $9.33 million) for an 80% equity stake in the venture, with the local partner holding the remaining 20%.
Concurrently, the company signed hosting agreements with this partner and another local firm. These agreements ensure comprehensive data services for the mining rigs, including on-site hosting, broadband network infrastructure, security monitoring, server management, and troubleshooting support.
Texas Investment:
Earlier, on May 19, Bit Mining signed a cooperation agreement with Dory Creek, LLC, a wholly-owned subsidiary of Bitdeer, Inc. This partnership focuses on building a cryptocurrency mining data center in Texas. Bit Mining plans to invest a total of $25.74 million in this project.
The Texas facility is designed for a total operational load of 57.2 MW and is notable for its commitment to sustainability, pledging to source over 85% of its power from clean and low-carbon energy sources. This aligns with the broader optimization of the Texas grid towards greener energy. 👉 Explore more strategies for sustainable mining
Once operational, this Texas facility, combined with the company's existing hydro-powered mines in Sichuan (435 MW) and the new Kazakhstan operation, will bring Bit Mining's total global power capacity for mining to approximately 157.2 MW. Clean and low-carbon energy is expected to constitute over 98% of the company's energy mix.
Corporate Background and Strategic Outlook
Bit Mining, headquartered in Shenzhen, was formerly known as 500 Lottery Network (WBAI). The company underwent a significant strategic pivot in late 2020, announcing its entry into the blockchain and cryptocurrency sector. A key move was the acquisition of the renowned BTC.com mining pool from Bitdeer in April 2021, shortly after which it changed its stock ticker to "BTCM."
The company's CEO, Yang Xianfeng, emphasized that overseas expansion is a core long-term strategy. He stated that establishing a first-mover advantage in jurisdictions like Texas and Kazakhstan allows the company to leverage its deep industry expertise to navigate the evolving global regulatory landscape and drive long-term business growth.
Analysis of Mining Industry profitability in Q1 2021
The first quarter of 2021 was exceptionally profitable for the cryptocurrency mining industry, driven by a major bull market. Bit Mining was among the beneficiaries of this boom, achieving its first profitable quarter in five years.
The company's Q1 2021 financial report, released on May 10, showed a net profit of 12.78 million RMB. This represented a remarkable quarter-over-quarter revenue growth of 117.8% and a year-over-year increase of 532.3%. Through its mining activities, the company generated 147 Bitcoin, valued at approximately $8.3 million, with a daily production rate of around 4 Bitcoin. By May 10, its total Bitcoin holdings had reached 489.
This profitability marked a dramatic turnaround for the former 500 Lottery Network, which had reported annual losses from 2016 to 2019. The foray into crypto mining enabled the company to execute several acquisitions, including a software development firm, lottery-intertainment company Lotto Interactive, the BTC.com pool, and miner manufacturer Bee Computing. These moves established Bit Mining's vertical integration within the cryptocurrency mining sector, encompassing hardware manufacturing, pool operations, and mining facilities.
Frequently Asked Questions
Why are cryptocurrency mining companies moving out of China?
Mining companies are relocating their operations primarily due to new regulations in China that require the comprehensive shutdown and clearance of virtual currency mining projects. This has made mining operations in previous hubs like Sichuan and Xinjiang unviable, forcing businesses to seek countries with clearer regulatory frameworks and abundant energy resources.
Which countries are becoming new hubs for crypto mining?
Countries like Kazakhstan, the United States (particularly Texas), Canada, and some nations in Europe are emerging as popular destinations. They attract miners due to their friendly regulations, abundant energy supplies—often from renewable sources—and supportive infrastructure for data centers.
What is the significance of using clean energy for mining?
Using clean energy is crucial for two main reasons. First, it addresses growing environmental concerns about the high energy consumption of proof-of-work cryptocurrencies. Second, it provides miners with a more stable and often cheaper long-term energy solution, ensuring the sustainability and social license of their operations.
How does the hash rate relocation affect the Bitcoin network?
The mass migration of hash rate from one region to others causes a temporary drop in the network's total computational power. This can lead to slower block times initially. However, as miners successfully redeploy their equipment overseas, the network hash rate recovers and becomes more geographically decentralized, which can enhance its overall resilience.
What does vertical integration mean in crypto mining?
Vertical integration refers to a company controlling multiple stages of the mining supply chain. This can include manufacturing mining hardware (ASICs), operating a mining pool that aggregates hash power from individual miners, and running its own large-scale mining facilities. This strategy helps companies reduce costs and stabilize revenue streams.
What are the future prospects for relocated mining operations?
The future looks promising for companies that successfully navigate the relocation process. Establishing operations in regions with stable regulations and access to low-cost, sustainable energy creates a strong foundation for long-term growth. However, success remains tied to cryptocurrency market volatility and continued adaptive regulatory compliance. 👉 Get advanced methods for market analysis