Mankiw Event: BTCMining in North America, How to Be Greener?

Author: Man Kuen Law Firm On Friday’s Man Kuen afternoon tea event, we are very honored to invite Mr. Lei Jun, a shareholder and partner of Bitforest, to share with us. The sharing content is very professional. Mr. Lei Jun deeply elaborated on the current situation and future of overseas encryption asset Mining from the perspective of industry practitioners, providing valuable first-hand information and insights. After participating in the study, Lawyer Liu Honglin from the Mankun Law Firm organized the shared content into a document, and took this opportunity to share this valuable information with more fren who are interested in overseas encryption assets Mining. The following is the core content shared by Mr. Lei Jun. From Traditional Security to Mining: A Cross-border Journey Initially, my career was actually in traditional industries, mainly in security, such as fire protection and camera installation. At that time, due to project reasons, I often had contact with some friends from functional departments. One day, some miners approached us, hoping that we could help find suitable power supply points in Xinjiang and other places. Through these collaborations, I began to get in touch with the mysterious industry of ‘Mining’. Early domestic Mining was particularly interesting. Our group of miners found many inexpensive ‘Mining Farms’ in Xinjiang. After a period of time, we realized that this industry is indeed very profitable, and the profits can even be described as ‘huge profits’. Especially around 2017, the returns from Mining were very considerable, and that’s when I started to fully invest in this industry. Gradually, I became a frequent visitor on the list and began to gradually understand more about the industry’s insider. The market was booming at that time, and many industry pros, such as Baoye, Wu Jihan, and Zhang Nankang, emerged at that time. Baoye started mining in Inner Mongolia and Xinjiang, but later moved his mining farm to Sichuan due to policy restrictions and electricity costs. These early layouts also made me see the huge potential and market prospects of this industry. The birth of Bitcoin and the concept of Decentralization When it comes to Mining, we must first talk about the background of BTC’s birth. BTC was born during the global financial crisis in 2008, when the financial system had serious credit problems. There is a sentence in the Genesis Block of BTC, which says, ‘The Chancellor on brink of second bailout for banks,’ reflecting on the government’s continuous printing of money to rescue the market policy during the financial crisis. BTC was born in this context, and its original intention was to establish a global Payment Network that is Decentralized and independent of banks. The BTC network uses Distributed Ledger technology, and every participant can participate in bookkeeping. In order to motivate everyone to maintain the network, the BTC system has designed a mechanism: whoever helps with “bookkeeping” can get BTC rewards, and this reward mechanism has achieved the birth of the BTC “Mining” industry. Mining is not actually like “mining ore” as the literal meaning suggests, but rather using computers to perform complex data verification and calculations. The design of the BTC network results in the generation of a Block every ten minutes, and Miners can successfully package transaction data into the Block and receive BTC rewards from the system by continuously calculating and finding hash values that meet the criteria. When designing BTC, Satoshi Nakamoto limited the total amount to 21 million, and this total amount cannot be changed by anyone, which is also one of the core principles of the Decentralization system. In the early days, miners used ordinary CPUs, which had relatively low computing power. Later, as the network grew, people began using more powerful GPUs, and eventually developed specialized Mining Rigs with ASIC chips. These professional devices have extremely high computing power and consume more electricity. The essence of Mining is to compete for the right to keep accounts through continuous calculations, and the BTC obtained is a kind of reward. This model is similar to settlement in the banking system, but the difference is that this ‘bank’ is distributed over thousands of Mining Rigs worldwide. The glory and policy transformation of Mining in China China’s BTCMining industry started early, especially from 2013 to 2021, Mining Farms in Inner Mongolia, Xinjiang, Sichuan, and other places once accounted for over 70% of global Computing Power. The advantage of China’s Mining industry lies mainly in its abundant power resources. Inner Mongolia’s coal power, Xinjiang’s thermal power, Sichuan’s hydropower, all provide miners with very cheap and abundant electricity. At that time, everyone knew that Sichuan was the ‘Mining Holy Land’ because electricity during the rainy season was almost free. Many miners moved from Inner Mongolia and Xinjiang to Sichuan. You could see those mining rigs being moved near hydroelectric power stations one by one. Everyone’s strategy was very simple, just ‘move to where electricity is cheap.’ This flexibility also contributed to the glory of China’s mining industry. However, starting in 2021, the country’s management of carbon emissions and energy consumption has become increasingly strict, especially in the context of ‘carbon peak and carbon neutrality.’ Industries with high energy consumption, such as Bitcoin Mining, are being comprehensively cleaned up. Many Mining Farms are forced to shut down, and miners have to find ways to move their equipment out of the country. At that time, we saw the golden age of the domestic Mining industry come to an end overnight. However, even with the policy tightening, many miners continue to operate through various means. Some miners make their devices appear to be overseas through special IP configurations, but they are still operating domestically. This also reflects the industry’s resilience under policy pressure. With the changing policy environment in China, we are turning to overseas markets. Energy supply, electricity prices, policy environment, tax system, international valuation, etc. are all key factors we consider when choosing mining locations. In the end, we chose Canada as the main layout for BTC mining. Canada has abundant power resources, especially hydro and natural gas. Moreover, Canada’s political environment is stable and its laws are transparent, which allows us to operate legally and for the long term. Especially in the provinces of Alberta and British Columbia, where there is abundant electricity resources and relatively low electricity prices. We found that not only can we obtain a stable power supply here, but it is also advantageous for us to combine Mining with green energy. When the BTC Mining Rig is running, it generates a large amount of heat, which we utilize to heat smart greenhouses, achieving the concept of “green Mining”. The combination of BTCMining and green energy The impression that BTCMining usually gives people is ‘high energy consumption’, but we have been exploring how to make Mining greener, more environmentally friendly, and more sustainable. By investing in Canadian local high-tech agricultural enterprises, we are trying to use the heat generated by operating Mining Rigs to provide heating for smart greenhouses. For example, in a project in Manitoba, we introduce the waste heat from Mining Rigs into the smart greenhouse for heating. Because Canada’s winters are cold (similar to the natural environment in Heilongjiang Province, China), natural planting is not suitable, and agricultural production costs are high. This practice not only helps agricultural enterprises to drop costs, but also realizes the sustainable recycling of energy, which is environmentally friendly and efficient, and explores the possibility of sustainable development of encrypted asset Mining. Engaged in BTC Mining in Canada, strict compliance with local laws and tax regulations is required. Our model mainly relies on traditional equity financing, with clients’ funds used for the long-term development of the company, rather than solely for purchasing Mining Rig. This approach can effectively reduce investment risks and ensure the stable operation of the company. In addition, the policy environment in Canada is also very friendly. We cooperate with the local government to promote the application of more green energy. This model has achieved very good results in the early stages of promotion, which has gained recognition and support from the local government. For example, our smart greenhouse project in Manitoba provides assistance to local agricultural enterprises through the use of ‘heat recovery’ technology. This has not only brought us new sources of income, but also greatly enhanced our social influence. From a global perspective, the United States and Canada are undoubtedly the main centers of Mining. Especially in Texas, it has attracted a large number of Miners relying on cheap nuclear power and thermal power. However, regions with lower electricity prices such as Africa and the Middle East face difficulties in implementation due to inadequate infrastructure, social security issues, and uncertain political factors. North America has become the ultimate choice for large Miners to go abroad, as it has sound infrastructure, a harmonious security environment, and friendly policy support. Bitcoin Mining has experienced many ups and downs, but still demonstrates strong vitality. By continuously exploring new business models, such as integrating green energy and using natural gas to directly produce BTC, we believe that this industry will continue to grow in the global market. Our goal is not only to mine more BTC, but also to promote industry upgrades through practical business layouts and collaboration with traditional capital, allowing more elite talents and traditional capital from traditional industries to gradually get on board the industry, thereby comprehensively promoting the rapid development of the industry. Instead of simply profiting by increasing the quantity of BTC, we aim to upgrade to obtain greater capital returns within TradFi systems like Nasdaq. We believe that through continuous innovation and technological upgrades, Mining can become more environmentally friendly and efficient. If you have any legal issues and business cooperation needs in the field of encryption assets Mining, you can also contact Mankun Law Firm. We will provide you with professional support and solutions. #BTCMining Difficulty Hits an All-time High $BTC