Chinese Miners Are Dodging Bans
Disconnecting crypto farms from public power grids should have brought mining in China to zero, but enterprising crypto miners are switching to their own power supplies.
A week ago, Sichuan province authorities ordered the closure of the 26 biggest mining pools that collectively accounted for 15% of the world’s hashrate. As a result, some miners are now moving into more open countries. BTC.com, for example, is migrating to Kazakhstan. Meanwhile, smaller stakeholders are staying and switching to private power grids.
China is rich with water resources, and its remote areas are still not electrified. Because of that, Chinese authorities encourage the launch of private hydropower plants. According to state-owned media, there are over 25,000 small hydropower plants in the Yangtze River Economic Belt. To sell the electric energy generated, entrepreneurs have to get permission from the state and install equipment that meets environmental standards. However, some use the generated energy for mining.
A small hydropower plant with a 3-kWh capacity will cost about $1,000. It generates enough energy to connect a Bitmain S17 ASIC with a hashrate of 56 TH/s. A mining calculator shows that the ROI period for a hydropower plant is two months (excluding permit and connection costs).
Since cryptocurrencies are banned in China and miners are being pushed off public power grids, they can transition to private grids or launch their own. According to South China Morning Post, after a new wave of repressions, the number of hydropower plants with a power capacity of up to 50 kWh has risen substantially.
As of the time of writing, Bitcoin is trying to consolidate in the region of $35,000 while its network hashrate is still declining. But change is on the horizon. Mining difficulty will be readjusted on 3 July and is expected to drop by 24%. This will make mining even more profitable, which will encourage Chinese cryptocurrency miners to use renewable energy sources..
The StormGain Analytics Group