Merchants at Huaqiangbei sell Bitcoin mining machines. Photo: Courtesy of a local merchant

Huaqiangbei used to be a struggling electronics marketplace in Shenzhen, South China's Guangdong Province, but it has recently bounced back thanks to the Bitcoin mining business.

"The mining machine business has seen a boom in recent months in Huaqiangbei," a local businessman surnamed Liu told the Global Times on Tuesday.

Liu said that he started to sell the mining equipment in Huaqiangbei in July 2017. Before that he sold graphics cards, "but the graphics card business declined after sales of mining equipment became popular."

With the soaring prices of cryptocurrencies such as Bitcoin and Litecoin, the mining business in Huaqiangbei has attracted buyers from across China and the rest of the world in recent months.

"Most of my customers are from Russia," Liu said, adding that the prices of the mining machines have also risen, partly due to speculation.

An Antminer S9 mining machine can cost as much as 26,700 yuan ($4,167) per unit, an Antminer sales person based in Shenzhen who declined to be identified told the Global Times on Tuesday.

The price of the same machine is around 11,000 yuan on the company's official website.

"We were short of mining supplies last week, and just got a replenishment," the sales person said.

"This is a typical business opportunity driven by speculation. Once the prices of cryptocurrencies slump and people lose interest, the vendors will shift from selling mining machines to other electronic products," Tian Yun, director of the China Society of Macroeconomics Research Center, told the Global Times on Tuesday.

The mining machines sold in Huaqiangbei have no intrinsic innovation, Tian said.

"Many vendors rush to the lucrative sector to make profits, and they have no intention to bring forth new ideas via the machines," he noted.

Amid the booming mining equipment business, the rental price for shops in Huaqiangbei has risen by about 100 percent, financial news site finance.qq.com reported, citing an employee in Huaqiangbei.

Leading role

"Thanks to the advance of China's manufacturing sector, the country now enjoys a leading role globally in producing Bitcoin mining machines," said Zhang Yinhai, a veteran trader who started trading tokens in 2011.

Chinese businessmen are deploying their miner business in China as well as across the globe via the platform of Huaqiangbei, which has strong marketing capacity, experts said.

The Huaqiangbei commercial area has been China's largest electronics market for a long time, thanks to Guangdong's key role in manufacturing, logistics and trade.

China is home to the world's top three producers of digital currency mining equipment - Beijing-based Bitmain Technologies Co and Zhejiang-based Canaan and Ebang Communication - according to the report by news site finance.qq.com.

Bitmain's Antminer, Canaan's Avalon Miner and Ebang's Ebit Miner account for more than 90 percent of the global market, according to the media report.

Zhang told the Global Times on Tuesday that many other mining machine firms in China have already shut down.

Bitmain's Antminer machines are produced and assembled in Shenzhen, and then shipped to buyers around the world, capitalizing on the location advantages of the Shenzhen Special Economic Zone, experts said.

Another factor is that the approval procedure for mining equipment production is more complicated in foreign countries such as the US than it is in China, Zhang said, noting that many big companies in the US and Japan are stepping up efforts to conduct research and development for mining machines.

"As the technology is not that difficult, foreign firms are likely to catch up with China in producing mining equipment in a year," Zhang forecast.