(gentle music) – [Narrator] In late June
footage from crypto mining farms in China started popping up on Douyin, the Chinese version of Tiktok. Machines that mine
cryptocurrencies like Bitcoin were being dismantled and packed up. These facilities in China have produced up to 3/4 of
the world's supply of Bitcoin. But that started to change
when about a month earlier, one of China's most senior officials at the central government pledged to crack down on Bitcoin mining. But he didn't specify what
measures he would take against crypto miners. However, some local authorities
began taking action. – (woman speaking foreign language) – [Narrator] A government
backed news outlets showed social media footage
of miners turning off machines after authorities in Sichuan province, ordered electricity providers
to stop supplying power to these facilities. – All of this equipment came offline. There have been huge ripple effects. – [Narrator] After Beijing's warning, the global mining hash rate, that's the measurement
of the computing power used to mine Bitcoins
dropped by almost 50%.
– The sudden drop just means
everyone who continues mining now has a bigger piece of the pie. – [Narrator] So miners around
the world are taking advantage of the Exodus of Chinese miners to expand their own businesses and hoping that the power
behind cryptocurrencies is becoming less dependent
on a single country. First, you need to understand
how crypto miners make money. – Bitcoin miners are
effectively participating in a global lottery, every
time they start mining Bitcoin. – [Narrator] Brandon Arvanaghi used to be a security engineer at a crypto exchange,
and now runs a company that helps miners set up facilities. – Miners are solving these
complex math problems that secures the Bitcoin network. What these mining farms do
is they're able to do things in bulk. If we do it at scale, the odds are that we'll
eventually win the lottery.
– [Narrator] So crypto mining farms are usually made up of thousands
of specialized computers and the miners who get
the right answers first are rewarded with new cryptocurrencies. And these new coins can be
then sold on to exchanges. The vast majority of
these specialized machines have been manufactured in China, giving miners there a
quicker and cheaper access than others around the world. – These computers are
consuming a lot of electricity. It was so appealing to mine in China because of the almost free power from these hydro plants, for example. – [Narrator] So with easy access
to both machines and power, a large share of global Bitcoin mining has happened in China. The Beijing's tightening
grip on the industry is forcing its homegrown
miners to look for a way out. Since 2017, crypto trading
has been outlawed in China because of the potential risks cryptocurrencies pose
to financial stability and the possibility of
the assets being used for illegal activities.
And now mining has come into sharper focus because of the massive amount
of electricity consumed by farms, posing a threat
to Beijing's commitment to limit its carbon footprint. So miners in China are selling
their machines overseas or moving their operations
to countries like the U.S, Russia and Kazakhstan. This exit from China has
benefited miners elsewhere. – We are immediately earning
more Bitcoins every day. – [Narrator] Ben Gagnon
is a Chief Mining Officer at Bitfarms.
A publicly traded Bitcoin
mining company in Canada. And he says business after
Beijing's announcement has been booming. – It is still kind of hard to believe that all of this equipment came offline as that market share and the
hash rate has been cut in half. Our share of the Bitcoin
revenues has effectively doubled. – [Narrator] This has also meant access to some of the best machines that were once hard to get. – All the machines that
are being manufactured and are contracted to
these Chinese customers that no longer have a
place to be installed.
– [Narrator] Prices of
these mining machines have also dropped substantially. For instance, one of
the most popular models, which used to cost more than $10,000 was available for around half the price. With the market awash with cheap machines, Gagnon says crypto miners
are looking to expand across North America and Central Asia. – All around the world, I
think people are excited. They're looking to gain that market share, and either you can work
with Chinese miners or to purchase their equipment from them and earn that revenue for themselves.
– [Narrator] But expansion
comes with one big item that isn't so easy to come by. – [Ben] Now, the bottleneck
is really on power. So if you buy these machines and you don't have a
place to plug them in, it's not really a good
use of your investment. – [Narrator] Gagnon says,
it's a race against time to set up the power infrastructure before other miners come back online. – 'Cause it just takes a lot longer to develop this infrastructure
outside of China. A lot of groups are doing
what we're doing right now, and they're focusing on
the energy infrastructure. They need to negotiate it,
they need to secure the permit.
So it's a long path forward. – [Narrator] But the
crypto industry overseas could face similar pressures as in China. For instance, in the U.S, authorities have proposed
plans to hold crypto exchanges to the same standards as
traditional securities and financial services. Well, some local communities
have expressed concerns about the environmental
impact of mining facilities. Despite the challenges ahead, once these new mining farms are created, crypto mining will likely
no longer be concentrated in just one place. – Concentration in China is
the most dangerous outcome because as you can see the entire mining industry
in that state can shut down. – [Narrator] As for
China's homegrown miners, the once golden place for mining will become a less viable option. – These miners in China are
now looking for new homes in favor of places that are secure. They know the costs are far
too high, they need stability..
