Chinese Miners Look Into Green Energy As Government Ramps Up Pressure
China’s path towards reducing its carbon footprint has left the Bitcoin mining industry in shambles. With some estimates showing that over 65% of all Bitcoin mining is concentrated within China, this goes beyond just a problem for miners and becomes a significant problem for the entire crypto industry.
The country’s massive effort to regulate its energy emissions has already affected Bitcoin’s price and forced many mining operations to shut down. China’s Inner Mongolia region has been a Mecca for many Chinese Bitcoin miners until last year when the local government shut down all large operations in the area to meet its climate goals. Luckily, the abundant hydropower Sichuan has long been known for attracted many of those miners. During the region’s five-month rainy season, many miners move their operations to Sichuan and establish mining farms in close proximity to hydropower plants. Once the rainy season is over, they pack their bags and return either to Yunnan or the Xinjiang Uygur Autonomous Region to take advantage of lower electricity costs during the winter months.
However, with Xinjiang and Yunnan’s governments getting increasingly skeptical about Bitcoin mining in the regions, Sichuan remains the most, if not the only viable mining hub for the foreseeable future.
Elon Musk’s recent announcement that Tesla will begin accepting Bitcoin as payment once miners reduced their energy consumption has also pushed miners to consider alternative energy sources. According to a report from CGTN, the miners’ decision to go green happens to coincide with the recent establishment of the Bitcoin Mining Council. The council, which counts MicroStrategy’s Michael Saylor among its members, has put more focus on the issue and highlighted some of the issues miners might face when moving operations.
Namely, many large mining farms are looking into moving to other countries with better and more sustainable energy sources, but are facing issues regarding their equipment. According to Alex Brammer, the Vice President of Business Development of Luxor & Hashrate Index, moving large mining operations overseas “won’t be an easy task.” He explained that cheap electricity miners enjoyed in China enabled them to keep older generation mining rigs. However, packing up the low-efficiency machines and loading them up in containers on transoceanic ships won’t be economically viable, he added.
That’s why some miners plan on accessing clean electricity within China instead of moving overseas. Arthur Lee, the CEO of SAI, a bitcoin mining company, said that miners are trying to collaborate with power generation companies to know the status of excess energy generation. If they manage to identify plants that produce excess energy, they might be able to connect their farm to prevent energy waste.
Other miners are looking into electricity generated by solar and wind farms. This type of electricity is often the cheapest on the market, as many solar and wind farms are yet to be connected to a main regional grid. According to China’s National Energy Administration (NEA), 17.1% of the total wind-generated power has gone to waste as of 2017. In 2019, China wasted 1.24 billion kWh of solar power and 4.35 billion kWh of wind power.