Bitmain is brewing a storm in the state of Washington
The Chinese ban on cryptocurrency mining has led to a flood of hash power exiting the communist empire that has since dominated the mining market. One of the most prominent migrators out of China is a company called Bitmain, which is also the world's largest supplier of ASIC miners. Usually when an exodus like this occurs, companies like Bitmain begin to saturate other economies with their technology. That is happening in the state of Washington in the United States, and the implications might not be so good.
Recently, the port of Walla Walla, Washington approved a large land lease by Bitmain. They are looking to build a massive crypto mining facility in Washington, since the electricity rates are some of the lowest in the United States. However, many residents voiced their concerns over the amount of energy the company will require and how that would affect the local community. These are well known concerns around the world, but the reality is beginning to set in for the average person in Washington.
Here are a few of the biggest issues at hand:
1. Many blockchain projects use Proof-of-Work (PoW) in order to achieve consensus on the blockchain. As a result, this requires large sums of computing power (hash power) and an enormous amount of electricity. This is great for justifying the value of cryptocurrencies like Bitcoin, but the power demand increases the electrical bill for everyone else. In a state like Washington, where electrical rates are generally very low, this can come as a shock to the livelihood of many individuals and businesses that traditionally enjoy these lower rates. The economic effect will not be pretty.
2. Alongside this massive power consumption is the debate over ASICs over-saturating the mining market. Network hash rates are already very high for most blockchain projects, and ASICs make them even higher. Essentially, the higher the network hash rate for a crypto, the more competitive it becomes for a miner to achieve profitability. Most miners frown upon ASIC mining for this reason, but as technology continues to advance, the question will be whether or not it's even avoidable.
3. Lastly, there is the concern over government regulations. Many in congress don't understand blockchain tech just yet, but that won't stop them from creating setbacks in the crypto mining industry. When Bitmain makes moves like this into Washington and funnels ASICs into the market, it's going to create a communal push to restrict mining in general on both the state and federal level. I'm sure that many small mining operations in Washington share this sentiment and would like to avoid losing their business as a result of companies like Bitmain stirring up controversy.
It's important to note the economic and communal effects of Bitmain moving it's operations into a foreign country, like the United States. These seemingly small events can lead to growing tensions that may serve as a catalyst for unfavorable outcomes in the future. As a miner, it's important to understand. As an investor in blockchain, this can make or break your investments. A storm is brewing in the mining community and close attention to key issues is a must.