Cryptocurrency Mining Diversification from China to the United States is Happening Fast
The decentralization of crypto seems to be gaining ground in the United States, as Bitcoin mining activities are on the rise in the US.
With the impending cryptocurrency mining ban in China, the Chinese government's skepticism on cryptocurrency in general and the rising pressure from the US-China trade war, it's no surprise that crypto miners in China are looking to move mining activity out of the country.
Squire Mining and Core Scientific Deal
Squire Mining (SQRMF) a Canadian-based publicly listed company dedicated in developing, manufacturing and selling data mining infrastructure and system technology to support global blockchain applications in the mining space, has signed a 41,000 Bitcoin (SHA – 256) ASICs hosting intent letter to the US.
This Squire Mining move is part of a deal with Kevin Turner (former COO of Microsoft) led Core Scientific, an AI, and Blockchain company.
SQRMF put over $6 million into this agreement and Core Scientific intends to commit a minimum of $12 million in building infrastructure to accommodate the relocated mining equipment.
Squire Mining has tight relations with Bitcoin SV (BSV) leaders. Executives of nChain, Jimmy Nguyen and Craig Wright, both are advisors to SQRMF.
In addition, Squire Mining is in several agreements with CoinGeek,an organization which runs both a cryptocurrency news outlet and a mining pool.
70% of Total Cryptocurrencies Mined in China
Reports in the past indicate that over 70% of all cryptocurrency mining is done in China, with multiple reports stating that the majority of this 70% is done in a single Chinese province, Guangdong.
This kind of mining concentration in a single location could be detrimental to the cryptocurrency networks as it makes them vulnerable to manipulation, censorship, and even worse, total takeover by government bodies.
However, due to uncertainties in terms of regulations by the Chinese government, miners in China are looking to move their mining operations out of China to reduce any impact such regulations may have on them. A win for cryptocurrency decentralization!
Such diversification of mining operations across several nations will make the network less vulnerable to government interference.
Kristy-leigh Minehan, the CTO of Core Scientific, on this mining diversification said:
“The dynamics of the PoW ecosystem are starting to shift. In 2015–2017, we saw most of this infrastructure deployed under regions where electricity was plentiful but not necessarily regulated—places in Asia or Eastern Europe. Very little focus on blockchain as an application or platform. In North America, however, there was a focus on application and protocol development, but infrastructure had largely been ignored. In 2019, we’re starting to see this dynamic shift—North America is becoming more focused on infrastructure, and China is making a big play for application development.”
United States Vs Chinese Mining Operations
The CTO also outlined how Core Scientific is capable of competing with Chinese-based mining operations, saying that though costs might be higher in the US, due to the fact that ASICs are built in China, US-based mining firms operate in a relatively stable environment. Minehan also added that US-based operations are built for long term efficiency as against minimizing cost.
Core Scientific is also dedicated in the optimization of their mining equipment to ensure competitive hosting rates in the international market.
Effect on Public Chains
In further clarification, Minehan went on to explain how this affects public chains.
“The recent release of EY’s Nightfall protocol and Microsoft’s identity solution on Bitcoin is indicative of Fortune 500 companies starting to realize the value of public chains. We’re going to see a flywheel of consumerism. More investors, more developers, and more applications—which all leads to more transactions (and the need for more miners). 2017 was the year of the private chain, I see 2020 as the year of the public chain.”
Core Scientific is a relatively unheard Washington based blockchain and A.I. infrastructure and hosting company.
The firm claims to have a rather impressive executive team which constitutes of very prominent people in the tech industry, including
- Kristy-leigh former Area Manager for Genesis Technology, the world's largest GPU-based mining operation.
- J.R. Tietsort, CISO of Micron Technology
- Ganesh Balakrishnan, head of product for Woot and Twitch
- Jim Bendetto, the previous CTO of Gravity
- Bill Humes, the former CFO of Ingram Micro.
The U.S. Securities and Exchange Commission (SEC) filings from Core Scientific show that it is raised a whopping $250 million in a private placement. The exact amount of equity sold in the placement was not stated, however, it could place the value of Core Scientific close to a billion dollars.