The future of crypto mining post-China crackdown

Chinese mining firms are looking west amid the crackdown on crypto. CoinDesk Global Macro Editor Emily Parker joins Yahoo Finance Live to discuss.

Video transcript

- Well, it has been dubbed the great mining migration. Chinese Bitcoin miners leaving the country en masse as regulators crack down on mining operations there. That's creating huge opportunities around the world, from neighboring Kazakhstan to right here in the US. To talk more about that, let's bring in Emily Parker. She is CoinDesk's Global Macro Editor, as well as CoinDesk's anchor.

And Emily, we've heard so many stories of where these operators are headed, but is there a clear winner? Because when you think about where things stood before, I mean, China had more than half of the world's operations.

EMILY PARKER: So there is not a clear winner, which is probably a good thing for the decentralization of mining. But you know, some people have said that Chinese miners might come to North America. We have states competing for these Chinese miners, like Florida or Texas. But as my colleague David Pan reported, there is no clear winner. We might also see miners migrating to Central Asia or to Latin America. A lot of it is going to come down to electricity costs and crypto policies, which are seen as either friendly or friendly towards miners. So no, there is no clear winner.

- And as expected. I mean, as we see those miners come back on the network, you see the difficulty, in terms of mining for Bitcoin moving back up, as was expected. And I suppose, you know, that's kind of-- that's just how it works. That's how the protocol works. When you dig into maybe what we're seeing now, though, on the regulatory front, it is interesting to see more and more not just the infrastructure piece that we've been talking about potentially adding close to $30 billion in crypto taxes for the sector but now also a bigger push into everything we've been discussing in stablecoins and giving the Fed more power.

I mean, what do you see right now when it comes to maybe those headwinds on the sector as it's seen? I mean, we got Gary Gensler talking about it today too. So everyone really starting to take notice.

EMILY PARKER: Crypto moves so fast. And right now, what we're seeing are US lawmakers rushing frantically to catch up. And so we're seeing several bills trying to be passed. One is by representative buyer. My colleague Nik De called it the most comprehensive bill yet on crypto. And then, we also see, as you mentioned, about $28 billion for crypto taxes in the infrastructure bill. So basically, what this is, is Congress trying to find a way to regulate this really fast moving and very new industry.

But you know, I think there's a lot of controversy over the infrastructure bill in particular, specifically how it would affect miners, because right now, it looks like miners might be subject to these crypto taxes. But the problem is, is that it would be very difficult for them to comply, because miners are not technically brokers. So there are various advocates trying to change this because they're afraid that if the infrastructure bill passes in its current form, it could actually lead to miners leaving the US or avoiding the US.

- And going back to, Emily, you know, where exactly these miners are headed. Obviously, cheap electricity the key driver for anybody who's looking for the right spot, but you mentioned incentives that are out there too. We've heard from the likes of Governor Abbott over in Texas, who's trying to open up his state to more of these miners. But if you look around the world here, what do you think looks the most attractive from an incentive standpoint?

EMILY PARKER: That's a great question. I mean, again, a lot of it is going to come down to how-- I mean, there's various questions here also, like how quickly miners can set up in various countries, right? The US, probably, is at a disadvantage to Central Asia, just in terms of how quickly miners can get up and running. And speed is really key now, just given sort of all the disruption in the mining industry. So you know, there's things like speed. And again, there's crypto policies. I mean, I think there is really serious concern that if the infrastructure bill passes in its current form, we are not going to see miners coming to the US because they're going to be concerned that they're not going to be able to comply with US tax regulations. So I would classify that as a disincentive for miners coming to the United States.