According to Beijing journalist Colin Wu, due to the freezing of OTC traders’ accounts, 74% of local miners faced problems paying their electricity bills.
Chinese media reported blocking bank accounts and cards used to buy cryptocurrencies back in June. Due to the growing scale of illegal use of digital assets, regulators in China have begun to pay increased attention to over-the-counter (OTC) platforms.
The authorities have launched investigations into the owner of the RenrenBit OTC site Zhao Dong and the founder of the OKCoin exchange Xu Mingxing. According to the Chinese authorities, such measures are aimed at combating illegal activities and money laundering through cryptocurrencies.
Colin Wu tweeted that the actions of the Chinese government are complicating the exchange of cryptoassets for fiat currencies and holding back activity in the cryptocurrency market. This negatively affects Bitcoin miners. According to Colin Wu, many miners were forced to shut down their hardware in the past month because they were unable to sell cryptocurrency to pay their electricity bills. Some OTC platforms serving mining firms have also ceased operations.
Thomas Heller, former director of international business development for the F2Pool mining pool and COO of HASHR8, said that it is now difficult for Chinese miners to convert BTC or USDT into yuan on OTC platforms, as bank accounts are often frozen. Similar cases have occurred before, but over the past few months they have increased significantly. Therefore, there is a possibility that miners can relocate from China to Russia or Kazakhstan.
Heller explained that most local miners are only familiar with the Chinese market, so it is difficult for them to move overseas and set up farms there. But the ban on the OTC market in China could be a factor that will push miners to look for “workarounds” or move abroad.
In August, the authorities of the Chinese province of Inner Mongolia decided to increase electricity tariffs by 30% for 21 mining farms. Last fall, regulators of this province announced that they would tighten control over mining companies.
