“What I have seen recently, probably over the past three to six months, is a real growing shift towards attempts to move a lot of that activity outside of China into specifically the United States and Canada,” said Barry Silbert, founder of New York-based Grayscale Investments, in an online presentation to investors. Silbert did not specify why the shift was happening.
Many mainstream investors such as pension funds or asset managers have been reluctant to embrace bitcoin, concerned at its volatility, security breaches and lack of transparent markets.
Bitcoin, heavily favoured by enthusiasts and retail investors since it emerged more than a decade ago, has gained increasing interest from hedge funds and trading firms. Many are drawn to its potential for high returns in an era of rock-bottom interest rates.
Miners in China currently control two-thirds or about 66 percent of the power of all computers around the world that are hooked up to the bitcoin network, according to a report by digital asset manager CoinShares. Chinese firms such as Bitmain have become among the world’s biggest miners and manufacturers of bitcoin mining hardware. Another maker, Canaan, launched an initial public offering in November.
That dominance has allowed Chinese miners to produce greater numbers of coins, and has also stoked demand for mining gear produced in the country. However, crypto-mining remains a highly opaque sector, with little reliable data on the bitcoin network or bitcoin miners.
Bitcoin miners draw on huge amounts of computing power as they battle against others to solve complex mathematical equations to earn new coins. The higher the hashrate, the more power is needed to produce bitcoin.
At Tuesday’s bitcoin price of around $10,300, miners produce bitcoin worth around $6.7bn every year.
The lucrative activity often takes place in cold climates or sparsely populated areas, such as Scandinavia and Quebec, because of the vast amounts of heat it produces.
Grayscale, which oversees around $3.1bn worth of cryptocurrencies, has been striving to attract larger investors to digital coins.
Last month, it became the first digital currency investment vehicle to attain the status of reporting company at the US Securities and Exchange Commission, it said on Tuesday. This subjects its crypto-products to the same reporting standards as those traded on major exchanges.