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Except, that is, in China, where the abundance of cheap power enables miners to keep the cost-per-coin at roughly $2,400. Globally, according to research by JPMorgan Chase, “the production-weighted cash cost to create one bitcoin averaged around $4,060 globally in the fourth quarter” of 2018, meaning that as bitcoin’s price hovered around the $4,000 mark in recent months it looked as if bitcoin might fall to a point where it became financially unfeasible to continue to mine for it. For their algorithmic chiseling, miners are rewarded with cryptocurrency coins.
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This is what makes cryptocurrencies comparatively decentralised and also theoretically impossible to hack.
#Best coin mining 2017 series
Miners secure the network for a cryptocurrency, maintaining its infrastructure – its blockchain – by solving a series of complex computational problems necessary to string together transactions in clusters, or “blocks”, which constitute the “chain”. For those at the top of China's crypto economy – including the mining moguls I spoke to – this is a clarion call to mine as much money as they can before it is too late. Mining bosses in China are making their millions in a legal grey area – and a new directive issued last week by the The National Development and Reform Commission (NDRC) hints that cryptocurrency mining may soon be outlawed altogether. But the very existence of this crypto gold rush is under threat. In other words, despite the precipitous fall in bitcoin’s price over the last 18 months, Mr Gao has been planning to expand.Ĭhina has 70 per cent of the world’s crypto-mining capacity, and over 70 per cent of that capacity is nestled in the mountains of Sichuan, where abundant hydroelectric power makes the price per kilowatt some of the cheapest anywhere in the world. At present he has the capacity for 110,000 new machines, in sites spread throughout China’s sprawling western provinces, Sichuan and Yunnan, and also in the north, in Xinjiang and Mongolia. Mr Gao is a bitcoin miner, with a few thousand mining rigs of his own, and facilities that he leases out to others.
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Mr Gao tells me, “Just because something is not illegal in China, doesn’t make it legal.” He takes a slight pause, a short breath, before leaning emphasis on the final word.