Bitcoin miners sold 'like scrap' in China triggers bear market flashbacks

Chinese Bitcoin miners are opting to sell off thousands of dollars of hardware for a huge loss rather than risk the wrath of the country’s communist government, reports the Economic Times.

China-based Bitcoin miners are selling their rigs for cheap rather than risk Beijing’s wrath, reported Reuters last week, echoing the depths of 2018’s bear market.

A local Bitcoin miner told the outlet that prices of top-tier machines sunk up to 80% in mainland China following the latest crypto crackdown, which has seen operations in the southwest buckle under government pressure.

“Many miners are exiting the business to comply with government policies,” said a crypto hub operator in Sichuan (via Reuters).

“Mining machines are selling like scrap metal.”

Beijing recently banned crypto mining across Sichuan, Yunnan, Xinjiang, and Inner Mongolia, citing environmental concerns and a need to protect investors.

Those regions served as global hotspots for the industry due to their access to cheap and renewable energy.

Bitcoin’s hashrate (the total processing power on the network) has fallen up to 45% to a one-year low as a result.

Bitcoin hashrate chart courtesy of YCharts.

Bitmain (the world’s largest crypto rig manufacturer) has suspended sales in a bid to find balance.

Bitmain claimed rejecting new orders for Bitcoin miners would help those leaving the crypto game garner more cash for their inventory.

Bloomberg noted the move could boost prices for new machines in the future.

One industry insider told reporters that Bitmain and Whatsminer crypto miners could recently be bought for a quarter of their April price, when Bitcoin peaked at about $64,000.

Bitcoin currently trades for $36,600, down 45% from that record high.

Bitmain will reportedly continue taking orders for rigs that mine altcoins, but gave no timeframe for resuming Bitcoin-specific sales.

As for mainland participants determined to stay in crypto, BIT Mining’s operations in Kazakhstan already received 320 rigs earlier this month.

Bloomberg noted a second and third shipment would together deliver 2,600 more by July 1.

Bear market flashbacks

Bitcoin miners selling like scrap may ring bells for veterans of bear markets past.

In November 2018 — when Bitcoin traded 70% below its then-$20,000 price record — crypto miners in China had begun offloading rigs for one-twentieth of their value a year prior.

The situation was so dire at one point that once cutting-edge miners were reportedly sold “by the kilo.”

Bear market nightmares for Bitcoin bulls.

In any case, China’s Communist Party has now decimated the local Bitcoin industry (which provided an estimated 65% of the world’s BTC hashrate), but opposition from miners seems unlikely.

“If the government doesn’t allow [crypto mining], I just have to quit,” said one operator in Yunnan to Reuters last week (our emphasis).

“You don’t fight the Communist Party in China, do you?”