Electricity Used For Mining in Sichuan to Increase 150% in 2021
The Chinese province of Sichuan has become a Bitcoin mining hotspot in the past few years. Data gathered from local reports and hash rate trackers have shown that the landlocked southwestern province has the highest concentration of Bitcoin mining firms in the entire world. And while neighboring provinces such as Yunan are slowly becoming mining hubs as well, they still fall way behind Sichuan both in terms of the sheer number of mining operations and the amount of hash rate they produce.
The main reason behind this high concentration of miners in the region is Sichuan’s cheap electricity. Home to the highest number of hydropower plants and offering near-ideal weather, Sichuan has positioned itself as the Mecca for Bitcoin mining farms.
However, the region’s reign as the global mining hub could be coming to an end. According to the latest reports coming from the Sichuan Electricity Trading Division, the price of electricity in the region will significantly increase in the following months. The Sichuan Electricity Trading Division released its annual trading results for 2021, detailing the transactions in the provincial electricity market in the past year.
According to the report, there were 12,359 registered market entities on the Sichuan Power Trading platform, including 313 power generating enterprises, 11,801 power users, and 245 power sale companies. The liberalization of the market in 2020 led to a significant increase in the number of registered market players—a 106% YoY increase. The annual electricity consumption in the region was 4.567 billion kWh. The report noted that the relatively low consumption was due to the local government’s aggressive promotion of hydropower. The local government also managed to further enhance the vitality of the power market by eliminating surplus power and introducing other varieties of supply-demand ratio restrictions.
But, the good results posted in the first part of the report don’t spell good news for Bitcoin miners. While the region mostly relies on hydropower, it supplements the increased demand with the use of thermal power from coal mines. The latest carbon-neutral policy instituted by the Chinese government will further reduce the use of coal mines in Sichuan, making the entirety of the region’s energy consumption rely on hydropower.
With the Sichuan Electricity Trading Division’s report estimating that the electricity used for Bitcoin mining will reach 11.3 billion kWh in 2021, this will put even more pressure on Sichuan’s hydropower. The total power consumption for Bitcoin mining in 2021 is expected to represent an increase of over 150% over the total power consumption recorded in 2020. Some experts believe that the consumption could increase by another 10 billion kWh by the end of the year.
The cost of electricity in Sichuan currently stands at $0.02/kWh and represents an increase of around 16% over the average price recorded in 2020. With the rainy season beginning in the summer and boosting the region’s overall hydropower, more Bitcoin miners are expected to flock to Sichuan in the following months. The Sichuan Electricity Trading Division believes that this will lead to further increases in the price of hydropower and warned that the current supply of power for cryptocurrency mining was already in short supply.