Chinese cryptocurrency miners are “fire-selling” their equipment. The country has announced that mining will no longer be allowed and, even if the crackdown has not been converted into regulation, it appears that many miners have been put off by the hostility. Instead of closing up shop, however, some miners are looking to relocate their operations outside the country. Jason Simon is an expert in cryptocurrency and FinTech, and explains what China’s decision is doing to the crypto mining ecosystem.

People mining in China have come to the conclusion that it is now a riskier proposition to operate in the country than they previously had anticipated. Some are already leaving, even though China has not legally ordered a complete shutdown. As a result, used cryptocurrency mining equipment is being sold at steep discounts, with some gear selling for as much as 40% less than standard used equipment rates. Says Simon, “This is even greater than other normal prices, with Chinese mining machine manufacturer Canaan stating that prices have fallen by 20-30% in the past month.”

Some of the miners selling their rigs are entrepreneurs whose hosting contracts, agreements that allow them to rent space for their activity in larger Chinese mining facilities in order to benefit from cheap energy and optimized infrastructure, were already approaching the end of the contract period. This makes the decision to vacate the mining space easier, with those individuals opting to sell their equipment instead of renewing hosting deals that might be canceled by the government.

Other miners, however, are going to take their business elsewhere, but it’s difficult to ascertain how many might choose to relocate. “Right now, Bitcoin’s hashrate is about 1.5% lower than it was on May 21,” explains Simon. “This suggests a large-scale exodus has not happened yet, and that decrease could also be a result of unrelated issues. However, in the long run, a shift in the geographic distribution of Bitcoin mining is likely underway.”

A source familiar with China’s Bitcoin mining industry has stated that miners are panicking. They’re transporting their equipment to Kazakhstan, across the border from China, but those who can’t afford the move will ultimately continue their operations in China. However, they will instead turn to clandestine locations to try and thwart government oversight.

Some miners are also looking to relocate to North America. They’re frantically trying to find collocation space power throughout the region and are calling anyone in the North American cryptocurrency space to try to find new locations. In addition, parts of northern Europe and Latin America, where energy can be found at reasonable prices, are also being targeted. Adds Simon, “There is a definite shift occurring because of China’s decision to ban mining. The move is likely in preparation of the country’s launch of a central bank digital currency next year, but Bitcoin has already proved resilient and won’t disappear simply because China bans mining.”