At-home GPU crypto mining is surging in China — for now

After China’s crypto mining crackdown this summer led to the shutdown of the large-scale industrial facilities, it appears that at-home mining with graphics processing units (GPUs) has made a comeback – at least for now.

The Block has found more than 100 merchants selling customized GPU mining “cases” on the e-commerce platform Taobao in recent months.

Each case, which costs around $200, allows a customer to insert up to eight graphic cards. They come with pre-installed motherboards, core processors, hard drives and operating systems to ease the set-up and are equipped with unique power adaptors and fans to reduce the noise and heat. 

The idea is to make it easy to set up at home. “You need GPUs that are compatible with the box. Power them up and connect to a monitor so that you have an interface to follow through the instructions,” a customer representative explained.

Based on The Block’s review of the top 20 such merchants on Taobao ranked by their monthly sales volume, it appears that a growing number of customers are buying into the idea — even though mining at home requires paying relatively steep energy prices. 

Data on Taobao shows that these merchants have been selling more than 4,000 mining cases every month on the platform. They’ve also gathered more than 10,000 customer reviews, many of which include videos and images showing people mining crypto assets with GPUs in their living rooms or spare rooms.

Though some of the reviews date back to March and April, the majority of the customer reviews were posted between June to September, suggesting the resurgence has grown despite China’s initial crackdown.

It’s hard to gauge the scale at which these at-home miners are operating nationwide. Some of the images show people mining with one case in the living room while others show more than 10 cases in operation. It’s also possible that some users have set up multiple small-scale operations in different locations.

But if Ethereum’s recent hash rate recovery indicates anything, it’s that many crypto miners in China have not forsaken profits at all but have just opted for a more low profile and decentralized business strategy.

"My fifth case already,” one customer posted in a review two weeks ago. “The design of the overall layout is reasonable and suitable for my operation, I’m using 8 RX580 cards. The noise of the fans is acceptable, it’s the sound of money printers after all. Gonna order two more next week."

The resurgence of GPU mining comes at a time when China is intensifying its crackdown on secret crypto mining operations. But it remains to be seen whether and how authorities will be able to detect home-based operators. Since GPUs generally consume less energy and produce much less noise than bitcoin ASIC miners, they are less likely to draw attention from utility companies due to spiking bills.

That's not to say that it’s off the government’s radar, however.

China’s central economic planning agency, the National Development and Reformation Commission (NDRC) published a Q&A statement on Friday stating that it has ordered provincial governments to make the crackdown on crypto mining part of their annual performance metrics.

“While the rectification over centralized large scale mining operations has been effective, crypto mining activities now have new characteristics, such as becoming decentralized, small-scale and well hidden, which increases the difficulty on spotting them precisely,” the agency said in the Q&A.

“Next, we will work on a long-term mechanism to optimize the techniques with different government agencies including the finance, energy, business, internet, market supervision and taxation bureaus.”

Hours after the NDRC dropped the news, China-based Sparkpool, the world's largest Ethereum mining pool, said it will no longer serve miners based in mainland China in response to the latest regulatory policy.

GPU economics

Either way, new entrants to the GPU mining scene face a graphics card market that has drastically changed over the past three months. In short, they missed the chance to scoop up GPUs during the July fire sale.

After China’s initial crackdown in June, crypto miners started dumping their GPUs onto the secondhand marketplace as industrial-scale facilities were cut off energy supplies. 

In July, some high-end models, such as the RTX 30 series, were selling for around $400 per card on Alibaba’s secondhand marketplace app Xianyu. The payback period for those investments has now been shortened because Ethereum’s price recovered quickly from the July plunge. 

New entrants now would face a tougher situation. Take RX580, a relatively low-end model, as an example.

China's average residential energy cost is around 0.54 yuan ($0.08) per kilowatt-hour (kWh). At Ethereum’s current difficulty and price, one mining case with eight RX580 graphic cards can theoretically generate $16.80 in revenue every 24 hours, with $14.50 counting as profits, based on data from Poolin.

However, a used RX580 card with 8GB memory can cost as much as 3,000 yuan (about $461) on Xianyu. That’s pricier than what a high-end model was going for in July. But the profitability of an RX580 card is only about half of an RTX 3060.

That means that at Ethereum’s current hash rate and price, it would take roughly nine months for new entrants to make their money back.