A crackdown by Beijing is rapidly accelerating a shift in focus by makers of machines that ‘mine’ cryptocurrencies like bitcoin from China to North America and Central Asia as Chinese clients face an uncertain future.
China’s central government vowed to clamp down on bitcoin mining and trading on Friday, causing some miners to halt all or part of their operations in a country that accounts for more than half of the world’s crypto supply.
The makers of the equipment miners use, many of them Chinese, say they are now looking elsewhere for growth.
Hangzhou-based Ebang International said that its “mining machines will still be in short supply” overseas, even if domestic sales disappear.
The impact will be further softened by the fact that “domestic customers will go overseas to mine”, it added in a statement sent to Reuters.
Illustrating the trend, Shenzhen-headquartered BIT Mining Ltd said in a statement on Monday that it had entered into a deal with a Kazakhstan-based company to jointly invest in a crypto mining data centre in the central Asian country.
Bitcoin miners use increasingly powerful, specially-designed computer equipment, known as “rigs”, to verify bitcoin transactions in a process which produces newly minted bitcoins.
The energy-hungry business is big in China, although the country’s market share had been declining for years due to regulatory uncertainty.
If China quickly loses its crypto computing power, foreign miners will benefit, Alex Ao, vice president of Innosilicon Technology, a chip-designer and crypto mining rig maker, said.
“Places like North America and Central Asia have advantages in terms of power supply and policy support,” Ao said, adding that more Chinese miners will shift abroad.
Edward Lu, senior vice president of Canaan Inc, another Chinese maker of mining machines, said it was looking at similar markets.
“The strategy should be to strenuously develop markets such as Kazakhstan, Canada, and North Europe, where energy resources are abundant and cheap, while regulations are clear and predictable,” Lu told Reuters.
Although China’s northern region of Inner Mongolia, a major mining centre, published draft rules on Tuesday to root out the business, other major mining centres have yet to issue their own, after last week’s salvo from a State Council committee led by Chinese Vice Premier Liu He.
“Relocating their mining operations to overseas is the miners’ only Plan B,” Winston Ma, NYU Law School adjunct professor, said, adding that only China’s biggest mining operators can make the exodus smoothly.
Kazhakstan, which clarified its crypto mining rules last year, hopes it will boost an oil-dominated economy.
“We received inquiries from three Chinese bitcoin miners on Monday about using our hosting services,” said Didar Bekbauov co-founder of Kazakhstan based Hive Mining, which provides ‘hosting hotels’ for mining machines.
Bekbauov said it appeared they were looking for an alternative after the crackdown.
Some miners are angry at having to move.
“As long as the mining business is not illegal, you should not kill the industry with just a few words from officials,” one Chinese crypto player, who declined to be identified, said.
(Reporting by Samuel Shen in Shanghai and Alun John in Hong Kong; Editing by Sumeet Chatterjee and Alexander Smith)
Bank of Montreal CEO sees growth in U.S. share of earnings
Bank of Montreal expects its earnings contribution from the U.S. to keep growing, even without any mergers and acquisitions, driven by a much smaller market share than at home and nearly C$1 trillion ($823.38 billion) of assets, Chief Executive Officer Darryl White said on Monday.
“We do think we have plenty of scale,” and the ability to compete with both banks of similar as well as smaller size, White said at a Morgan Stanley conference, adding that the bank’s U.S. market share is between 1% and 5% based on the business line, versus 10% to 35% in Canada. “And we do it off the scale of our global balance sheet of C$950 billion.”
($1 = 1.2145 Canadian dollars)
(Reporting by Nichola Saminather; Editing by Leslie Adler)
GameStop falls 27% on potential share sale
Shares of GameStop Corp lost more than a quarter of their value on Thursday and other so-called meme stocks also declined in a sell-off that hit a broad range of names favored by retail investors.
The video game retailer’s shares closed down 27.16% at $220.39, their biggest one-day percentage loss in 11 weeks. The drop came a day after GameStop said in a quarterly report that it may sell up to 5 million new shares, sparking concerns of potential dilution for existing shareholders.
“The threat of dilution from the five million-share sale is the dagger in the hearts of GameStop shareholders,” said Jake Dollarhide, chief executive officer of Longbow Asset Management. “The meme trade is not working today, so logic for at least one day has returned.”
Soaring rallies in the shares of GameStop and AMC Entertainment Holdings over the past month have helped reinvigorate the meme stock frenzy that began earlier this year and fueled big moves in a fresh crop of names popular with investors on forums such as Reddit’s WallStreetBets.
Many of those names traded lower on Thursday, with shares of Clover Health Investments Corp down 15.2%, burger chain Wendy’s falling 3.1% and prison operator Geo Group Inc, one of the more recently minted meme stocks, down nearly 20% after surging more than 38% on Wednesday. AMC shares were off more than 13%.
Worries that other companies could leverage recent stock price gains by announcing share sales may be rippling out to the broader meme stock universe, said Jack Ablin, chief investment officer at Cresset Capital.
AMC last week took advantage of a 400% surge in its share price since mid-May to announce a pair of stock offerings.
“It appears that other companies, like GameStop, are hoping to follow AMC’s lead by issuing shares and otherwise profit from the meme stocks run-up,” Ablin said. “Investors are taking a dim view of that strategy.”
Wedbush Securities on Thursday raised its price target on GameStop to $50, from $39. GameStop will likely sell all 5 million new shares but that amount only represents a “modest” dilution of 7%, Wedbush analysts wrote.
GameStop on Wednesday reported stronger-than-expected earnings, and named the former head of Amazon.com Inc’s Australian business as its chief executive officer.
GameStop’s shares rallied more than 1,600% in January when a surge of buying forced bearish investors to unwind their bets in a phenomenon known as a short squeeze.
The company on Wednesday said the U.S. Securities and Exchange Commission had requested documents and information related to an investigation into that trading.
In the past two weeks, the so-called “meme stocks” have received $1.27 billion of retail inflows, Vanda Research said on Wednesday, matching their January peak.
(Reporting by Aaron Saldanha and Sagarika Jaisinghani in Bengaluru and Sinead Carew in New York; Additional reporting by Ira Iosebashvili; Editing by Sriraj Kalluvila, Shounak Dasgupta, Jonathan Oatis and Nick Zieminski)
U.S. to work with allies to secure electric vehicle metals
The United States must work with allies to secure the minerals needed for electric vehicle batteries and process them domestically in light of environmental and other competing interests, the White House said on Tuesday.
The strategy, first reported by Reuters in late May, will include new funding to expand international investments in electric vehicles (EV) metal projects through the U.S. Development Finance Corporation, as well as new efforts to boost supply from recycling batteries.
The U.S. has been working to secure minerals from allied countries, including Canada and Finland. The 250-page report outlining policy recommendations mentioned large lithium supplies in Chile and Australia, the world’s two largest producers of the white battery metal.
President Joe Biden‘s administration will also launch a working group to identify where minerals used in EV batteries and other technologies can be produced and processed domestically.
Securing enough copper, lithium and other raw materials to make EV batteries is a major obstacle to Biden’s aggressive EV adoption plans, with domestic mines facing extensive regulatory hurdles and environmental opposition.
The White House acknowledged China’s role as the world’s largest processor of EV metals and said it would expand efforts to lessen that dependency.
“The United States cannot and does not need to mine and process all critical battery inputs at home. It can and should work with allies and partners to expand global production and to ensure secure global supplies,” it said in the report.
The White House also said the Department of the Interior and others agencies will work to identify gaps in mine permitting laws to ensure any new production “meets strong standards” in terms of both the environment and community input.
The report noted Native American opposition to Lithium Americas Corp’s Thacker Pass lithium project in Nevada, as well as plans by automaker Tesla Inc to produce its own lithium.
The steps come after Biden, who has made fighting climate change and competing with China centerpieces of his agenda, ordered a 100-day review of gaps in supply chains in key areas, including EVs.
Democrats are pushing aggressive climate goals to have a majority of U.S.-manufactured cars be electric by 2030 and every car on the road to be electric by 2040.
As part of the recommendations from four executive branch agencies, Biden is being advised to take steps to restore the country’s strategic mineral stockpile and expand funding to map the mineral resources available domestically.
Some of those steps would require the support of Congress, where Biden’s fellow Democrats have only slim majorities.
The Energy Department already has $17 billion in authority through its Advanced Technology Vehicles Manufacturing Loan program to fund some investments.
The program’s administrators will focus on financing battery manufacturers and companies that refine, recycle and process critical minerals, the White House said.
(Reporting by Trevor Hunnicutt in Washington and Ernest Scheyder in Houston; Editing by Mary Milliken, Aurora Ellis and Sonya Hepinstall)
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