By Landon Manning
Already a global hotspot for bitcoin mining thanks to the availability of cheap hydroelectric power, China’s Sichuan Province is now the focus of a changing attitude from the central government, which is actively trying to court more mining operations with a variety of incentives.
As part of widespread infrastructural plans taken part in the late 2000s and early 2010s, the Sichuan Province in the south of China was selected to become home to a vast amount of hydroelectric power plants, largely due to the sheer volume of rainfall that hits the province, trickling through many tributaries and smaller rivers into the mighty Yangtze.
With this access to cheap electricity, the rivers of the Sichuan Province have been attracting crypto miners for several years, with many flocking to the region in 2019 from several far-flung regions of the larger country. There have been minor hiccups to this industry in the past due to flash floods, but the basic conditions of profitability have not changed.
Although the Chinese government has treated this mining community with scorn in the past, it is now making overtures toward supporting the growth of the bitcoin mining industry in Sichuan. In April, when the novel coronavirus pandemic was raging worldwide, the city government of Ya’an published a document espousing the values of this area’s power sources for bitcoin mining. The document claims that “Blockchain companies should construct factories near power plants that have excessive power and are integrated with the State Grid,” but that mining operations using different sources of electricity should switch to surplus hydroelectric power immediately. Although it’s not the capital of Sichuan Province, Ya’an is an important city with well over 1.5 million inhabitants.
After the local government in Ya’an changed its tune in this fashion, the initiative began seeing great success by August. The government has been approving a number of new miners to begin operations, and it’s been seeing high levels of compliance in keeping the miners on plants with a significant surplus. With the highest rates of bitcoin mining per capita, miners in the area have seen electricity prices as low as one cent per kilowatt hour.
With these initial successes in smaller cities, new initiatives are being taken by Sichuan’s capital. In late August, the municipal government of Chengdu announced the development of a “blockchain industrial park,” intended to foster a strong ecosystem for these new businesses by putting their computing power together. Already, eight mining firms have agreed to participate in this project, with 39 further interested parties, according to reports.
This episode displays the power that Bitcoin has to radically transform economic systems in practice. Perhaps due to the pandemic, these miners are now being recognized for the real muscle they can bring to the Sichuan Province’s bustling economy, and the possibilities seem to only be expanding from here. This development can spell interesting things for the future of Bitcoin adoption worldwide.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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