Bitcoin Miners Find a Home in Southeast Asia After China Crackdown

The 17-acre cement slab in the middle of a Borneo industrial area once belonged to a logging company. Long ago that business abandoned the site to the elements, leaving just rudimentary structures and a four-story-tall concrete birdhouse made to lure swiftlets whose nests, built with saliva, fetch high prices in China.

After China banned Bitcoin miners in 2021, many of them moved to Southeast Asia. The region has become a popular destination for miners due to its low-cost electricity, skilled labor, and existing infrastructure.

One of the largest Bitcoin mining operations in Southeast Asia is located in Tanjung Manis, Sarawak. The site, which once belonged to a logging company, now houses over 1,000 Bitcoin mining machines. The machines are sheltered by a vast, sheet-metal roof, and hundreds more are waiting to be unpacked nearby in cardboard boxes.

The site is owned by Peter Lim, who chose the location after he was forced to close down a larger mining operation in China. “Most of the companies already left this industrial park,” said Lim. “We decided, why don’t we make use of these abandoned resources?”

Lim's company, Bityou, is one of several mining operations in the area. According to Lim, Bityou's operations are legal, but not all miners in Southeast Asia are operating above board.

When the Chinese authorities declared that any crypto-related transactions would be considered illicit financial activity, the Bitcoin mining industry in the country was devastated.

“Back then, some of the state governments, they just seize your property,” said Alex Loh, Lim's colleague at Bityou, in an interview.

Loh said that some 3,000 of his machines were seized at a mine he used to run in Inner Mongolia. He was also a stakeholder in a 120-megawatt site in Sichuan province that suffered a similar fate. “We spent about three months to build that place,” said Loh. “But once we started our operation, less than a month, we have to stop.”

Despite the crackdown in China, Bitcoin has surged more than fourfold since the start of last year to trade around $67,000 at lunchtime in Singapore on June 13. The rise has been fueled in part by the US launch of spot Bitcoin ETFs in January.

Renewed institutional interest has boosted the earnings of miners, who generated revenue of $960 million in May, according to data tracked by The Block Research. Bitcoin's strong performance has partially offset the impact of April's "halving," a quadrennial event that slashes the rewards earned by miners for maintaining the network.

According to Cambridge University data, the US became the global leader in terms of hashrate — a measure of the computational power used to process transactions on the Bitcoin network — by January 2022.

Now Southeast Asian nations are also climbing the ranks. According to the Cambridge data, Malaysia contributed 2.5% of the global hashrate, placing it among the top 10 nations. Preliminary results from more recent mining research suggest activity in Indonesia “markedly rose” in 2022 to between “lower and mid-single digit percentages,” said Alexander Neumüller, a research lead at Cambridge.

According to Lim, the region's appeal for miners is also due to the availability of competitively priced power, skilled labor, and, crucially, existing infrastructure.

As miners in the region seek out sites with access to the substantial electricity they require, mining rigs are springing up all over Southeast Asia in abandoned shopping malls, former steel factories, and on the side of hydro-electric power projects. According to Fred Thiel, CEO and chairman of Marathon Digital Holdings, one of the world's largest Bitcoin miners, this is because miners in the region don't have the option of exploiting “gluts of power” like those in the US, who can dial up their activity during periods of lower power demand for preferential prices.

Manufacturers of mining rigs have followed the miners to Southeast Asia, shifting some operations to the region as they seek to meet burgeoning demand and, like many other industries, to avoid US tariffs on China.

According to Ben Gagnon, chief mining officer at Bitfarms, which is currently the target of a $950 million takeover bid, until 2018, when former President Donald Trump imposed a 25% duty on a range of electronic goods from China, Bitcoin rig production was “almost entirely” based in Shenzhen and Guangzhou.

“The vast majority of miners now are produced in Malaysia. There are manufacturing locations also in Thailand, Indonesia, Taiwan, the US also to some extent,” said Gagnon, who has visited manufacturing facilities in Penang and Indonesia to conduct quality control checks for the Toronto-based miner. Some of the sites belong to Bitmain, while others belong to its closest rival, MicroBT. Bitmain declined to comment, while MicroBT stated in emailed comments that it had manufacturing in the region and facilities in both Thailand and the US.

Finding a HomeSetting up shop is not always straightforward for miners. Like Lim, many are taking root in unexpected places, often leading a precarious existence thanks to frequent shifts in the stance of regulators as well as conditions that

News source：https://www.kdj.com/cryptocurrencies-news/articles/bitcoin-miners-southeast-asia-china-crackdown.html

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