Mining hardware manufacturer Bitmain has reportedly halted global spot sales of its mining rigs, amid substantial selling volumes on the second-hand market and ongoing pressure from authorities in China to crackdown on block reward mining operators in the country.
The news comes against the backdrop of a wider clampdown on mining activities by local authorities in China, at a time of growing supply of used mining equipment across international markets.
In freezing the sales, Bitmain says it is attempting to prevent customers from incurring losses on new machines, with prices for new units in free fall, as well as protecting themselves from sustaining more significant losses over the long-term, due to the flood of second-hand devices entering the market.
A spokesperson for Bitmain said the firm would continue to deliver devices in the future for those used in mining smaller altcoins, though stopped short of giving any commitment as to when ordinary sales might resume.
The news will be a blow to those with mining equipment on order, or those who had intended to bolster their mining setups with new units from Bitmain and other miners.
Arthur Li, founder at mining firm Sai Technology which had secured investment from Bitmain, said the move was in response to significant downside pressures from the secondhand market in mining equipment.
Some devices are even selling for less than a third of their original resale price, reflecting the plummeting values on speculative BTC markets since it hit highs of around $64,000 back in April.
The fall in ASIC mining prices follows substantial price drops in Nvidia GPUs, which have fallen by as much as two-thirds since June of this year, echoing the drops elsewhere in the market.
According to local journalists close to the market in China, Bitmain is reported to be weighing up a move outside the country in the months to come, as conditions become tighter for mining manufacturers and other cryptocurrency firms.
Canaan sets up shop in Kazakhstan
Similar pressures have come to play on rivals Canaan Creative, which has set up operations in Kazakhstan, in a bid to avoid the increasingly tight approach of authorities in China. It comes as part of the company’s broader strategy for operating out of the country, which began earlier this month with the opening of its first overseas service center.
Chairman and CEO Nangeng Zhang said the move would be a net benefit for the firm’s financial performance.
“As we integrate more industry resources into our operations, we believe this business segment will enable us to revitalize our mining machine inventory, shield us from [BTC] volatility, and ensure our inventory sufficiency during market upturns.”
The moves from both Canaan and Bitmain come in the wake of intensifying pressure from authorities within China. Recent weeks have seen crypto mining firms shut down in Sichuan, Yunnan, Xinjiang, Inner Mongolia and Qinghai.
As a result, a number of companies operating in the sector have already packed up and moved to alternative jurisdictions, with Kazakhstan emerging as an early favorite in alternative to operating out of mainland China.
Major mining pool BTC.com became the latest to move its operations to the country, with its first batch of miners landing in Kazakhstan at the start of this week.
The demise of mining firms in China follows on from a boom earlier this year, driven by the unsustainably high BTC prices of the time. With secondhand mining units now becoming increasingly more common, and authorities in China and elsewhere taking a tougher line on these companies, it looks like their fortunes are beginning to take a turn for the worse.
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