The Chinese authorities’ declaration of war on Bitcoin miners and traders finally shows the other side of the coin. Graphics cards in China have never been so cheap.
Graphics cards at insane prices
According to an article in the South China Morning Post, graphics cards from companies like Nvidia and Asus are paying the bill for China’s crackdown on miners. Their prices have dropped by a whopping 2/3 on e-commerce platforms.
Miners are diverting graphics cards with relatively high hashing power from their primary use. Officially, Nvidia has restricted its cards to prevent gamers from falling victim to this diversionary use, resulting in higher GPU prices and periods of shortage on the market. However, this explanation does not convince all cryptophiles.
The situation of graphics cards in China is not likely to get any better with the hunt for miners in Sichuan. The latter follows the path of Inner Mongolia and Xinjiang. These 3 provinces used to deliver a significant share of Bitcoin’s computing power before the crackdown. Cambridge Bitcoin’s April 2020 data effectively attributes 36% of Bitcoin hashrate (BTC) to Xinjiang alone, compared to 65% for China as a whole.
Environmental concerns or currency war?
China cites environmental concerns to justify its hostility to mining. The country’s ambition is to reach peak carbon emissions by 2030 and to become carbon neutral by 2060. This goal seemingly legitimizes the shutdown of bitcoin mining operations, which is repeatedly accused – rightly or wrongly – of being energy-intensive and polluting. But there is a flaw in this reasoning. Sichuan province uses largely hydroelectric power, so it’s not carbon-intensive.
The hypothesis that China is trying to expel Bitcoin and its troublesome cadets from its territory to prepare for the arrival and foster the widespread adoption of the digital yuan cannot be dismissed. The country is ahead of its Western competitors in this area. It has already carried out numerous tests as part of pilot projects, one of which was carried out with a large sample of the population of Shenzhen in April 2021.
China, however, does not want to throw the baby out with the bathwater. It says no to Bitcoin, but it has big plans for the blockchain. Its aggressive policy against miners is not only changing the price of graphics cards, but also the global distribution map of Bitcoin’s hash rate.