China’s Hinterlands, Workers Mine Bitcoin

Views: 26

China’s Hinterlands, Workers Mine Bitcoin



Summer Sale

One of the largest sources of Bitcoin can be found in the grasslands of Inner Mongolia, despite Chinese skepticism over its potential for risk.

DALAD BANNER, China .They worked as factory hands, in the coal business and as farmers. Their spirits rose when a coal boom promised to bring factories and jobs to this land of grassy plains in Inner Mongolia. When the boom ebbed, they looked for work wherever they could.

Today, many have found it at a place that makes money  the digital kind.

China's Hinterlands, Workers Mine Bitcoin

Here, in what is locally called the Dalad Economic Development Zone, lies one of the biggest Bitcoin farms in the world. These eight factory buildings with blue-tin roofs account for nearly one-twentieth of the world’s daily production of the cryptocurrency.

Based on today’s prices, it issues $318,000 in digital currency a day.

From the outside, the factory  owned by a company called Bitmain China  does not look much different from the other buildings in the industrial park.

China's Hinterlands, Workers Mine Bitcoin

Its neighbors include chemical plants and aluminum smelters. Some of the buildings in the zone were never finished. Except for the occasional coal-carrying truck, the roads are largely silent.

Inside, instead of heavy industrial machinery, workers tend rows and rows of computers  nearly 25,000 computers in all  crunching the mathematical problems that create Bitcoin.

Workers carry laptop computers as they walk the aisles looking for breakdowns and checking cable connections. They fill water tanks that keep the computers from melting down or bursting into flame. Around them, hundreds of thousands of cooling fans fill the building with whooshing white noise.

Bitcoin’s believers say it will be the currency of the future. Purely electronic, it can be sent across borders anonymously without oversight by a central authority. That makes it appealing to a diverse and sometimes mismatched group that includes tech enthusiasts, civil libertarians, hackers and criminals.

Bitcoin is also, by and large, made in China. The country makes more than two-thirds of all Bitcoin issued daily. Bitmain, founded by Jihan Wu, a former investment analyst, makes money mostly by selling equipment to make Bitcoins, as well as mining the currency itself.

China has mixed feelings about Bitcoin.

On one hand, the government worries that Bitcoin will allow Chinese people to bypass its strict limits on how much money they can send abroad, and could also be used to commit crimes. Chinese officials are moving to close Bitcoin exchanges, where the currency is bought and sold, though they have not set a time frame. While that would not affect Bitcoin manufacturing directly, it would make buying and selling Bitcoin more expensive in one of its major markets, potentially hurting prices.

On the other hand, the digital currency may represent an opportunity for China to push into new technologies, a motivation behind its extensive push into other cutting-edge areas, like driverless cars and artificial intelligence. China continues to offer Bitcoin makers like Bitmain cheap electricity making Bitcoin requires immense amounts of power  and other inducements.

China's Hinterlands, Workers Mine Bitcoin

Dalad Banner may be far away from Beijing’s internet start-up scene and southern China’s gadget hub. Still, many of the workers and surrounding residents see a digital opportunity for Dalad Banner and the rest of their part of Inner Mongolia, an area famous in China for half-finished factories and towns so empty that they are sometimes called ghost cities.

Now the mine has about 50 employees, said Wang Wei, the manager of Bitmain China’s Dalad Banner facility, using one of several metaphors for the work being done there. I feel in the future it might bring hundreds or even thousands of jobs, like the big factories.

Mr. Wang, a 36-year-old resident and former coal salesman, purchased one Bitcoin about six months ago. It has since more than doubled in value. I made quite a lot of money, he said.

Continue reading the main story

China's Hinterlands, Workers Mine Bitcoin

China also sees a potential new source of jobs, particularly in underdeveloped places like Dalad Banner.

The county of about 370,000 people on the edge of the vast Kubuqi Desert boasts coal reserves and coal-powered heavy industries like steel. But it lags behind much of the rest of the country in broadly developing its economy. It is part of the urban area of Ordos, a city about 350 miles away from Beijing famous for it’s empty buildings.

China's Hinterlands, Workers Mine Bitcoin

Dalad Banner is not the sort of place that at first glance looks like a home for high-tech work. Indeed, the idea took some getting used to, even among the workers.

I didn’t know anything about Bitcoin then, said Li Shuangsheng, a 28-year-old resident who maintains the operations of one of the eight factories.

He bounced from job to job  the chemical plant was too noisy and polluted, he said  before he landed about one month ago at Bitmain China’s Dalad Banner factory, one of the few lucrative job opportunities in the sparsely populated region.

Mr. Li does not yet own any Bitcoin, but he is happy with the work and studying up on the subject online when family time permits.

Now, he said, i’m starting to have some idea.

Many at the farm have experienced the ups and downs of the local economy.

Bai Xiaotu was laid off from a state-owned furniture factory in 1997. He had been doing different menial jobs until he went to work at Bitmain’s Dalad Banner farm in December as a cleaner.

Look around, there are abandoned factories on both sides of our farm, said Mr. Bai, a 53-year-old with a weather-beaten face. Many factories are not doing that great.

But the industry is still new to most. Bai Dong, Mr. Bai’s 31-year-old son, had never heard of Bitcoin when his father first got the job. After searching on the internet, he found that the Bitcoin price was rising quickly and that the farm was one of the biggest in the world. I feel positive about the future of the industry, Mr. Bai said.

But he is still confused what Bitcoin mining is.

We have coal mines, he said. Now we have a Bitcoin mine. They are both mines. What’s their relationship.

Continue reading the main story

CreditGiulia Marchi for The New

Bitcoin, Business, China