Chinese Crypto Miners Are Taken Down as Investors Flee
Bitcoin mining is essentially the process involved in authorizing and recording Bitcoin transactions on a distributed ledger, the blockchain. The process results in producing new bitcoins while decentralizing the network’s security. Bitcoin mining can be a very profitable business as the miners are paid for authorizing transactions of users.
However, recent events must be taken into account. For instance, Lu Qing, a 24-year-old who had made a living Bitcoin mining in the Tibet-area city of Delingha, recently returning home to Jiangxi Province. Lu was driven out not by the bleak highlands, but by the business failing.
With bitcoin tumbling 80% from peak levels, digital currencies have broadly declined. In China that bans bitcoin trading, the impact is still felt, especially among young people who aspired to get rich quick.
Miners earn bitcoin by lending their computing power to validating transactions. Lu ran a mining business in an industrial park by sourcing cheap electricity from a state-owned supplier. The facility had 7,000 mining computers in the middle of last year. Lu also held a stake in the facility’s operator and set up computers paid for with personal funds, in addition to operating other people’s mining equipment on their behalf.
There is a large cost incurred during Bitcoin mining from payment of mining rig to the electricity bill. When signs of a market downturn surfaced, the business was still making a profit, supported by the low cost of electricity in Qinghai, but the business collapsed as bitcoin fell from its peak of around $20,000 to below $4,000, prompting a customer exodus and forcing Lu to sell off mining computers. So far, developments in the cryptocurrency movement has led miners to look for alternatives. Only time will tell what’s in store for the Bitcoin mining industry.
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