One of the world’s largest bitcoin miners is setting up a hub for European operations in Switzerland, a person familiar with company has confirmed to swissinfo.ch. The Chinese firm Bitmain Technologies is setting up in Zug just as the Chinese authorities move to shut down cryptocurrency miners.
Bitmain Technologiesexternal link builds and supplies machines for bitcoin mining and runs its super-scale mine in China. The company set up its Swiss office Bitmain Switzerland in December, the newspaper Handelszeitung first reported on Wednesday.
“Bitmain Switzerland will play a central role during our global expansion,” a spokesman for the Beijing-based group told the newspaper. One of the people involved in setting up the Swiss entity, lawyer Christian Meisser, confirmed the report, which also states that it plans to hold talks with the Swiss financial regulator and potential strategic partners. No other details are available at present.
The virtual currency bitcoin hit the headlines last year as it gained in value from below $1,000 (CHF979) per token to $20,000 in December. It currently trades at just under $14,000external link. The phenomenal valuation increase has made some people very rich, but raised concerns in other quarters that it is a bubble waiting to burst.
Bitcoin is also proving a challenge to regulators as it is minted (or mined) in a decentralised way that bypasses central banks and the established financial system. There are fears that this could open the doors for criminal activities using cryptocurrencies. Some countries, including China, have reacted with strict controls to nullify the growing influence of cryptocurrencies.
According to a Financial Times article on Thursday, Beijing has created a multi-agency task force that aims to wipe out the bitcoin mining industry. Bitmain Technologies has not commented on this development.
Zug is home to Switzerland’s Crypto Valley, a region that is building a welcoming environment for global cryptocurrency and blockchain companies. It has already attracted the likes of Xapo, the Ethereum Foundation and Breadwallet while spawning a growing number of home-grown companies.
China is believed to be the largest single country for mining bitcoin, but this might change as the authorities crack down. Cryptocurrency mining in Switzerland is so far on a much smaller scale, but the country’s political stability, hands-off regulation, cold alpine climate and access to copious amounts of hydropower are all benefits for crypto miners.
The last two advantages help cool computers involved in mining and provide and more environmentally supply of electricity for the power hungry operation.
One such company, Alpine Mining, has recently set up an eco-friendly mine in Gondo in southern Switzerland.