China’s crypto crackdown sparks Thai crypto-mining boom

Bangkok, Thailand – By the time the ax fell on China’s massive cryptocurrency mines, Thai businessman Pongsakorn Tongtaveenan was ready to dive, quickly buying up the redundant computer processors needed to retrieve Bitcoin from the network and send it to the Southeast Asian.

Prices are now back at over $ 13,000 for new “miners,” the computer hardware that solves the complex math puzzles that unleash Bitcoin rewards from the network.

Still, the 30-year-old Pongsakorn has been able to sell hundreds of units in Thailand as small players dive into cryptocurrencies as China cracks down on the lucrative market.

In September, Beijing banned all cryptocurrency trading and mining amid concerns that virtual currencies were “generating illegal and criminal activity” and posing a risk to the “economic and financial order.”

The crackdown forced some of the world’s largest Bitcoin mining operations to seek new bases with friendly regulations and the essential ingredient of cheap electricity to power thousands of computers around the clock.

The largest operations packed and relocated to the United States, particularly Texas, Malaysia, Russia, and Kazakhstan, among other countries.

But for many small miners eager to flee quickly for fear of incurring the wrath of China’s authoritarian government, the priority was to get some money back on their now-useless computers.

That created an opportunity for entrepreneurs like Pongsakorn, who were available to carry unwanted gear, mainly the Bitmain Antminer SJ19 Pro, from Shenzhen to Thailand.

“Bitcoin is the gold of the digital world. But a mining rig is like gold mining stocks: dividends are paid according to the price of gold, ”he said.

Pongsakorn’s rigs have fueled a cottage industry of miners in Thailand, each of whom can earn between $ 30-40 a day from each machine in operation.

“There are about 100,000 Thai miners now,” he said.

Among his ranks are people chasing a steady income during the pandemic, but also investors who believe in the future of digital assets.

“By the time China banned cryptocurrencies, we were ecstatic,” a Bitcoin enthusiast turned miner, who runs a small solar power processor from his garage in eastern Thailand, told Al Jazeera.

For an initial outlay of around 1 million baht ($ 30,000), he put a platform up and running.

“I got it all back in three months,” said the miner, who asked to remain anonymous.

Many larger Thai investors are keeping a close eye on neighboring Laos, which is tacitly embracing the rise of cryptocurrencies.

The poor and officially communist country of 7.2 million people has an internet penetration rate of just 43 percent, according to a 2020 study by internet and social media analysts We Are Social and Hootsuite.

But its advantage is the abundance of cheap electricity generated by dozens of mega-dams.

“More than 95 percent of the electricity produced is manufactured for export, so the excess must be used, otherwise it is a huge waste for the government,” an expert on Laos crypto regulations told Al Jazeera, requesting anonymity.

“They see an opportunity to transform that excess into millions of dollars.”

In November, the communist government opened cryptocurrency mining and trading by offering licenses to six large well-connected Laotian companies.

The initial terms of the license include a $ 5 million guarantee for any company planning to trade cryptocurrencies, while mining operations must register to buy around $ 1 million of electricity from Laos’ state grid annually and pay a large fee. operation fee.

“Laos is handicapped by geography and lack of human capital,” David Tuck, a partner at Bangkok-based risk consultancy Lyriant Advisory, told Al Jazeera.

“He desperately needs cash in the government coffers and has few options to generate income.”

Laos’ mega-dams, often financed with debt, produce electricity for neighbors, including Thailand, who have a diminishing need for externally sourced energy.

“A new demand from a major national buyer would be very welcome,” Tuck said.

But any Chinese miner thinking of crossing its southern border to connect to cheap electricity from Laos would still be within reach of its close ally Beijing.

“They would be operating in the backyard of China,” Tuck said.

“Enemy of the states”

Some observers fear that the profits from cryptocurrencies are going to only a handful of connected companies. The regulations favor “a very restricted group in Laos,” said the expert on Laos crypto regulations. “It’s not totally open to the Lao public, Lao consumers.”

In Thailand, one of Asia’s most unequal societies, it is the wealthy who are shaping the rules of the biggest crypto game despite the trend of small-scale investors taking advantage of leftover Chinese mining units.

In November, a unit of Thailand’s oldest bank, Siam Commercial Bank (SCB), paid $ 537 million to buy 51 percent of the shares of BitKub, Thailand’s largest crypto exchange. King Maha Vajiralongkorn of Thailand owns 23 percent of SCB.

As regulators finally allow Thais to easily trade digital currencies, BitKub seeks to absorb fees from millions of domestic clients, with the ambition to become the largest trading platform in Southeast Asia.

For some Thai crypto enthusiasts, BitKub’s rise is viewed with suspicion as an attempt to centralize a once-renegade form of finance.

“The purpose of Bitcoin was to become the ‘enemy of the states’ … but the rich have got hold of it,” said the miner who spoke on condition of anonymity. “If you can’t fight that, you better get on board.”


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