Two weeks after a 15% increase in electricity prices in Turkey, a new store selling professional mining equipment has opened its doors in Istanbul — the business hub of the country — on Tuesday.
Opening a mining equipment shop in a country with costly electricity seems counterintuitive. But Phoenix Store, Bitmain’s sales partner in the Middle East, did the math before opening its second store within the region. Phoenix Store CEO Phil Harvey explained that the company’s primary goal with the Istanbul store is to educate Turkey’s crypto-friendly population about crypto mining. Then, customers can purchase mining equipment and hosting services that would operate in Canada, the United States or Russia. Mining in Turkey is simply unfeasible.
“It’s like you want to invest in gold mining,” he said, “You can come here and invest in a gold mine, but it’s not going to be in the back garden. It’s going to be outside.”
“China needs to maintain its current growth for the projects in the country,” Harvey started, detailing the crackdown. The country is required to improve several areas, such as reducing its carbon footprint, to get funding from the International Monetary Fund or the World Bank:
“The easiest industry to reduce overnight was a gray area industry. Some 68,000 gigawatts of power was removed instantly from China just by saying no to Bitcoin mining.”
It’s a significant revenue stream, but even that would pale in comparison to how much the IMF or World Bank invest in China for projects like road initiatives. “So it was an easy decision for China to make to remove these miners and reduce the carbon footprint that they have,” Harvey added.
While several miners announced that they would relocate to cold-climate countries like Canada, Harvey believes that half of what’s lost due to China’s crackdown will never go back online:
“Because these are older machines that were in a warehouse for many, many years and were just making 5%–10%, and they were on. But it doesn’t make commercial sense to now take those off and move them.”
The value per machine might be $150–$200 at most, and it would take about the same amount of money per unit to relocate them. “It doesn’t make sense to do that,” he said, “That’s why I say half of what was on the network that we lost.”
Harvey expects regions such as Russia and Kazakhstan to increase their share in the mining landscape with new machines added to the network, but he doesn’t plan to open new stores in those countries for now. After Dubai and Istanbul, Phoenix only plans to open a store in London. “We won’t expand any further for the stores outside of those three locations,” he said.