China’s ongoing bitcoin mining crackdown has sent the price of graphics cards plummeting, making the critical component in mining operations much more affordable in the country but leaving miners with fewer places to set up shop.
The Nvidia Quadro P1000 model, an entry-level graphics card, was going for 2,429 yuan (RM1,558) on a JD.com franchise store on Monday morning, down from a peak of nearly 3,000 yuan (RM1,925) in early May, before the State Council’s financial watchdog vowed to crack down on bitcoin mining.
The Asus RTX3060, a more advanced card, was down to 4,699 yuan (RM3,015) on Monday from its peak of 13,499 yuan (RM8,663) in May on Tmall, operated by JD.com rival Alibaba Group Holding, the owner of the South China Morning Post. The price changes were tracked by e-commerce information provider Manmanbuy.
Graphics cards, typically associated with computers used for video gaming, are an important hardware component for cryptocurrency mining because of the extra processing power they provide for hashing, the complex computations used to create more digital currency and verify transactions on blockchain. The more computational power a miner controls, the better the chances of beating others to adding new blocks to the blockchain and reaping the rewards.
The price plunge comes after southwestern Sichuan province, which relies heavily on hydropower for electricity and had become China’s last bitcoin mining haven, pulled the plug on mining farms on Saturday night. Previous signals from local regulators suggested the province hoped to let miners take advantage of abundant hydropower over the summer.
However, none of China’s major bitcoin mining hubs have been spared from Beijing’s harsh crackdown in the wake of recent price volatility that saw the cryptocurrency’s value plunge by more than 40% in May. Inner Mongolia, Xinjiang and Sichuan had been attractive locations for miners because of their cheap electricity, but they are now hostile environments.
Besides price volatility, the massive amount of electricity needed for the constant hashing that powers blockchains has also become a concern in China, which aims to reach peak carbon emissions by 2030 and become carbon neutral by 2060.
In response to the crackdown, Inner Mongolia and Xinjiang issued notices this month for miners to start shutting down their operations. Sichuan, despite relying on cleaner hydropower instead of coal, ordered a halt to all cryptocurrency mining operations last week. It also told electricity providers to look into their clients to determine whether they are involved in mining operations and report the results before June 25.
Until the crackdown, these three provinces made up a significant portion of the bitcoin network’s global hash rate, the measure of the network’s computational power. Xinjiang alone accounted for 36%, according to numbers from the Cambridge Bitcoin Electricity Consumption Index from April 2020. As a whole, China controlled 65% of the network’s hash rate at that time.
Now many Chinese miners have either suspended operations entirely or are making plans to move overseas, reducing network activity and impacting bitcoin mining productivity worldwide.
The daily average hash rate for bitcoin dropped to 104 exahash operations per second in the past 24 hours, down from an average of 110 eh/s over the past three days and 120 eh/s for the past week, according to btc.com. In April, the figure was more than 200 eh/s. An exahash is equal to a quintillion hashes.
“It will be a milestone moment to go below 100 eh/s”, said Winston Ma, an adjunct professor at New York University School of Law who has written about technology in China. – South China Morning Post
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