Cryptocurrency crackdown in China has sparked a crypto-mining boom in Thailand

The Chinese crackdown on cryptocurrency has sparked a crypto-mining boom in Thailand
Cryptocurrency mining/courtesy of Facebook

Bangkok, Thailand (Reuters) – Pongsakorn Tongtaveenan, a Thai entrepreneur, was ready to strike when the axe fell on China’s massive cryptocurrency mines. He quickly purchased redundant computer processors needed to retrieve Bitcoin from the network and shipped them to Southeast Asia.

Pongsakorn told Al Jazeera, “Chinese miners got rid of their machines, and the price fell by 30%.”

The new “miners” – the computer hardware that solves the complex math puzzles that release the Bitcoin rewards from the network – are now worth more than $13,000.

Despite this, Pongsakorn, 30, has been able to sell hundreds of units across Thailand as small players rush into the lucrative cryptocurrency market as China cracks down.

Beijing banned all cryptocurrency trading and mining in September, citing concerns that virtual currencies “breed illegal and criminal activities” and posed a threat to the “economic and financial order.”

The crackdown forced some of the world’s largest Bitcoin mining operations to look for new bases with more favorable regulations and the necessary ingredient of low-cost electricity to power thousands of computers around the clock.

The biggest companies packed up and relocated their operations to the United States, particularly Texas, as well as Malaysia, Russia, and Kazakhstan.

However, for many smaller miners, the priority was to claw back some money on their now useless computers in order to avoid incurring the wrath of China’s authoritarian government.

This provided an opportunity for entrepreneurs like Pongsakorn, who was on hand to transport the unwanted equipment from Shenzhen to Thailand, primarily the Bitmain Antminer SJ19 Pro.

“Bitcoin is the digital world’s gold.” “However, a mining rig is similar to gold mining stocks in that you are paid dividends based on the gold price,” he explained.

Pongsakorn’s rigs have fueled a cottage industry of miners across Thailand, with each machine bringing in $30-40 per day.

China’s crackdown on cryptocurrencies is fuelling a cottage industry of crypto-miners in Southeast Asia

“Right now, there are around 100,000 Thai miners,” he said.

People looking for a steady income during the pandemic are among them, as are investors who believe in the future of digital assets.

“We were ecstatic when China banned crypto,” one Bitcoin enthusiast turned miner told Al Jazeera from his garage in eastern Thailand, where he runs a small solar-powered processor.

He was able to get a rig up and running for around 1 million baht ($30,000).

“I made it all back in three months,” the miner, who requested anonymity, said.

Many of Thailand’s larger investors are keeping a close eye on neighboring Laos, which is quietly embracing the rise of cryptocurrencies.

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

However, it has the advantage of a plentiful supply of cheap electricity generated by dozens of mega-dams.

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

“They see a chance to turn that surplus into millions of dollars.”

The communist government of Laos granted six large, well-connected Laotian companies licenses to engage in crypto mining and trading in November.

Any company planning to trade cryptocurrency must post a $5 million surety, while mining operations must sign up to buy about $1 million in electricity from the Laotian state grid each year and pay a large operating fee.

Thai entrepreneurs like Pongsakorn Tongtaveenan are buying up crypto-mining rigs following China’s crackdown on cryptocurrencies

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

“It is in desperate need of cash in government coffers and has few revenue-generating options.”

Laos’ mega-dams, which are frequently debt-financed, generate electricity for neighbors such as Thailand, which has a decreasing need for externally sourced power.

Tuck stated, “New demand from a major domestic buyer would be very welcome.”

However, any Chinese miners considering crossing the border into Laos to take advantage of the country’s cheap electricity would be within easy reach of Beijing, a close ally.

Tuck explained, “They’d be operating in China’s backyard.”

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‘Enemy of States’

Some analysts believe that the benefits of cryptocurrency will go to a small number of connected companies. The laws favor “a very small group in Laos,” according to an expert on the country’s crypto laws. “It is completely closed to the Lao public and Lao consumers.”

Despite the trend of small-scale investors piggybacking on leftover Chinese mining units, the rich in Thailand, one of Asia’s most unequal societies, are crafting the rules of the bigger crypto game.

Siam Commercial Bank (SCB), Thailand’s oldest bank, paid $537 million in November to buy 51 percent of BitKub, Thailand’s largest crypto exchange. SCB is owned by Thailand’s King Maha Vajiralongkorn, who owns 23% of the company.

BitKub is hoping to absorb the fees of millions of Thai customers as regulators finally allow them to trade digital currencies easily. Its goal is to become Southeast Asia’s largest trading platform.

BitKub’s emergence is viewed with suspicion by some Thai crypto enthusiasts as an attempt to centralize a once rogue form of finance.

“Bitcoin’s goal was to become the ‘enemy of states,’ but the rich have taken it over,” a miner who requested anonymity said. “You might as well jump on board if you can’t fight it.”

About Robert Oluoch

My focus is economic, politics, entertainment and gaming reviews. My aim is to depict the complication of life through the combination of words and creativity.

Have a tip we should know? tips@rhd.news

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