China moved against Bitcoin miners in 2019, worried that the rising cryptocurrency could drain money from the official financial system. Even so, China still dominates cryptocurrency mining, which is a computer process by which new digital coins are created. It takes many computers and a lot of electricity to run such an operation.
Now a cryptocurrency expert thinks the mining operations could move from China to North America.
Barry Silbert, founder of New York-based Grayscale Investments, made the observation in an online presentation to investors, without saying why the shift was occurring.
Pension funds, asset managers, and institutions haven’t lined up to buy the digital currencies. They’re worried about volatility, security breaches and lack of transparent markets. More than $4 billion worth of digital currency was stolen around the globe last year.
China’s bitcoin miners control an estimated two-thirds of the crypto network’s processing power, which has allowed Chinese miners to produce a lot of coins, and has also stoked demand for mining gear produced in the country, including high-end computers.
“What I have seen recently, probably over the past three to six months, is a real growing shift toward attempts to move a lot of that activity outside of China into specifically the U.S. and Canada.”
At Tuesday’s bitcoin price of around $10,300, miners produce bitcoin worth around $6.7 billion every year.
The lucrative activity often takes place in cold climates or sparsely populated areas, such as Scandinavia and Quebec, because of the vast amounts of heat it produces.
Grayscale oversees around $3.1 billion worth of cryptocurrencies and wants to attract larger investors to digital coins.