China restrictions bitcoin mining world lucrative businesses as like they won the lottery. This is how some big miners feel about bitcoin, the most popular cryptocurrency, since the Chinese government tried to stop the entire economy that revolves around it last May. To do this, it has imposed restrictions that have led to the interruption of the activity of most Chinese bitcoin miners, who accounted for half of the production worldwide of the cryptocurrency.
Many were concentrated in the Chinese regions of Xinjiang, in northern China, and Sichuan and Yunnan, in the south, and are now seeking accommodation in other countries among which neighboring Kazakhstan, which is becoming a surprising world power in bitcoin mining, is an interesting alternative for many.
Meanwhile, the rest of the world's bitcoin miners rub their eyes and pinch their arms to verify that this is not a dream: all the cake for them without having lifted a finger and without their fixed expenses having increased a penny.
The size of this, he recalled this Friday Forbes, is not difficult to calculate.
China restrictions bitcoin mining world lucrative businesses
If world producers, this medium estimates, earn about 6.25 coins every ten minutes, this yields about 328,500 per year. Considering that the price of bitcoin, according to the specialized portal Investing exceeds 35 euros, the total income of this cryptocurrency goes above 11,700 million euros annually. This, without adding the percentages of between 5% and 10% that miners earn for each transaction.
To this we must subtract the greater expense of the miners, the electricity with which they feed these equipment that allow them to carry out at great speed the very complex calculations to which they get such a good return.
In this regard, Digiconomist, the portal specialized in bitcoin, pollution and energy expenditure, calculates an expenditure of about 5 cents per Kilowatt hour. These come from applying an average between the 2 cents that are paid for electricity in Argentina or the 3 in Kazakhstan (another reason that makes this country attractive in the eyes of Chinese miners), for example, and the 8 that can be paid in the US.
Taking into account that, before the closure of China, which represented half of all the market share, this same website calculated a worldwide expenditure on electricity of more than 6,000 million euros by miners, it is expected that this has been reduced to about 3,000 million euros.
China restrictions bitcoin mining world lucrative businesses
The rest of the operation is simple: instead of having only about 2,500 million euros of gross profit (the result of subtracting half of the world's income less electricity expenditure), miners who have taken over the entire market have seen themselves with access, overnight, to more than 8,000 million euros, almost triple.
The figure is equivalent, for example, to the nearly 8,000 million euros that all listed companies in the United Kingdom have declared in dividends during the first half of 2021, according to data collected by Expansión.
It is true that these are theoretical accounts, approximate and, above all, projected over a whole year when the summer has not yet passed. It should also be remembered that the Chinese restrictions were announced in May and that, although the People's Bank of China for the moment seems willing to maintain regulatory pressure on bitcoin, it is clear that the Xi Jinping Government has not yet said the last word.
However, this access to higher income is already being noticed in some large miners, as analyzed by Forbes magazine itself. One of them is Bitfarm, a Canadian large-scale bitcoin mining company.
According to the company's reports, Bitfarms generated some 6.6 million euros in mining profits in February, the result of subtracting basic electricity and infrastructure production costs from revenues.
China restrictions bitcoin mining world lucrative businesses
But the lack of Chinese competition has skyrocketed the company's figures. In July, Bitfarm mined some 391 coins, twice as much as in February. This is 13.5 coins a day, compared to 7 coins five months earlier. Even with an average bitcoin price set at 30,000 euros (the value of the cryptocurrency has rebounded in recent weeks), Bitfarms has gone to 11.7 million euros in revenue, almost double.
But what is easy comes, easy goes, even if it takes a little time to do it or even if external factors alter a market situation that many analysts hope will take little time to correct.
This is the case of Frank Elderson, a banker from the Netherlands who is a member of the executive board of the European Central Bank. In March of this year, even before the Chinese government declared war on bitcoin, the ECB thought it might be interesting for Elderson, through the bank's own official Twitter account, to chat with tweeters for a while.
China restrictions bitcoin mining world lucrative businesses
They took little time to ask him about bitcoin. Elderson's response could not be more graphic or clearer about the central bank's own stance towards bitcoin, a cryptocurrency whose volatility he has already warned on more than one occasion.
Elderson then compared what is happening with the price of bitcoin to the tulip crisis, one of the first mass speculative phenomena recorded in the history of the Economy. During this bubble, in the early seventeenth century, the desire to buy, sell and resell this flower raised its price to the absurd figure of 1,000 guilders when the annual salary of a well-paid craftsman was about 150.
For experts like Shawn Tully, of Forbes, experience says that in the markets what goes up, goes down; what inflates, deflates; and that where there are good profit margins for a few, it finally ends up being distributed among other competitors.
China restrictions bitcoin mining world lucrative businesses
For now, circumstances conspire in favor of bitcoin miners. On the one hand, China, which remains willing to eliminate mining stations; on the other, the global lack of the semiconductor materials from which immense mining equipment is made has prevented a good number of cryptocurrency enthusiasts from entering the market and claiming their share.
"In the long run, the bitcoin business will resemble the boring and exhausting task of looking for copper, silver or gold on earth. Bitcoin miners are incredibly profitable today in large part because they have been incredibly lucky. But his big blow will start a gold rush that will leave much less to deal, " concludes Tully.