The main manufacturer of digital mining equipment, Bitmain, cancels the sales of its products to buyers within the territory of China. The decision of the company’s leadership is motivated by the prohibition of the activity by the authorities. Likewise, it would come into effect as of this Monday, October 11.
An important aspect to highlight is that shipments to other parts of the world will not stop, but will continue without incident. On the other hand, the territories of Hong Kong and Taiwan, belonging to China, do not fall within this measure. In other words, sales and digital mining may continue in those provinces. Only the first of these should be considered to be under the political control of Beijing.
This measure by the Asian firm is expected to be followed by other manufacturers that are also within that country. These include Ebang and Canaan Creative, both listed on Nasdaq. A similar decision could also be made by the other giant MicroBT. Pressure from the authorities would be behind this new episode that deprives Chinese citizens of generating their own virtual currencies.
Bitmain sales will decline considerably due to this action
Now that Bitmain cancels the sale of ASICs equipment within the borders of mainland China, its revenue could be seriously affected. Until recently, that nation was ranked number one in Bitcoin mining, with roughly 65% of the entire global hash power of that Blockchain. In a matter of months, the authorities radically changed that landscape.
Internal sales were maintained for some time, but having no reason to be legal, it was inevitable that they would stop. Until now the true scope of this measure is unknown, especially in the second-hand or used equipment market.
It should be noted that a large part of the world’s miners, especially the medium and small ones, do not buy new equipment. The possibility of accessing them directly from the manufacturers is really limited. This is due to the global shortage of essential semiconductor chips to create these equipment. For this reason, they buy used equipment from Chinese resellers.
In this sense, a large part of Chinese merchants who dedicate their sales abroad could suffer this limitation when buying to sell. Be that as it may, the matter is recent and it is not known how far it could go. Meanwhile, only Bitmain is known to cancel its inside sales.
As of this October 11, the Bitmain measure came into effect, which cancels the sales of digital mining equipment within China.
Could Bitcoin be in trouble?
If the Chinese authorities force companies to stop their shipments abroad, the worst-case scenario could come. Although much of the manufacturers’ plants are outside of China, the current shortage of equipment would worsen.
However, this is a worst-case scenario and is unlikely to ever happen. In part, because the Chinese authorities need the machines to leave their territory. In other words, as long as the teams are trapped within the country, there will be those who want to connect them clandestinely. Although the authorities are good at chasing, it is a very large country.
At the same time, the existence of these companies is good for the Chinese economy. In other words, they pay taxes and contribute to development, and even if mining is illegal, producing abroad should not harm the country’s internal laws. This seems to be the scenario that Bitmain faces and for which it cancels the sales of equipment to citizens residing in China.
If this situation remains stable, the Bitcoin hashrate will continue to recover rapidly as it has been doing.