China’s Yunnan Demands Cleanup of Bitcoin Mining Operations with 64 Facilities Ordered to Dismantle

The Chinese province of Yunnan, one of the key crypto mining areas like its neighboring province Sichuan, has reportedly started pressuring cryptocurrency mining businesses operating in the region.

According to crypto news outlet Wu Blockchain, local government of the Dehong Dai and Jingpo Autonomous Prefecture in western Yunnan has convened a meeting in May involving a cleanup in the bitcoin mining sector, which demanded 57 “big data” projects that have been built without obtaining the approval from the local government and other 7 projects currently under construction to be dismantled within a time limit.

Local government ambivalent towards bitcoin mining 

Although the meeting affirmed the role of bitcoin mining activities in helping consume the abandoned hydroelectricity, it pointed out the security risks of pulling wires directly from hydropower stations, as well as the issues of severe tax evasion related to these mining businesses usually under the name of “big data” projects.

Compared with the alleged “world’s bitcoin mining capital” Sichuan, its neighbor Yunnan is late in bitcoin mining by using hydroelectricity which thrived since last year, but it also has a large scale for its cheap hydropower, low population density and cool climate. According to some local miners, the power load of Yunnan is about half that of Sichuan.

Dehong, among the least-developed cities/prefectures in terms of GDP performance in Yunnan, is expected to take to crypto mining as a niche approach to transforming its less-developed economy. Prior to it, some cities in Sichuan have encouraged bitcoin mining to help consume excessive hydropower during the rainy season.

However, the State Grid of Yunnan on April 13 issued a document throughout the province demanding a cleanup and rectification of illegal and unauthorized power supply directly from power plants.

In hydropower-abundant Sichuan and Yunnan, most mining farms get cheaper electricity rates directly from hydropower plants nearby rather than from local or national grids. Such practice is carried out in a legal grey area but makes perfect business sense for both sides. However, it encroaches on the interests of the local/national grids as well as local governments, which may explain why local governments, though want bitcoin mining to bring economic benefits, usually seem to be ambivalent towards the bitcoin mining industry.

Following the state grid, local government of Dehong soon convened the meeting demanding a cleanup of unauthorized mining businesses.

Not a ban, but the bar raised

On Friday May 29, an explosion in a hydropower station in Yunnan killed 6 people and injured 5 others. The cause of the explosion was unknown for the moment, but a province-wide effort in security inspection has been triggered. Although not related to mining farms there, the accident might lead to more serious inspection of security issues and restrictions on local miners. Some mining farms were said to have already had power cut.

Industry insiders told 8btc that some mining farms in Dehong are seeking a way out by selling their facilities because of the recent woes. While veteran miners told us that the “crackdown” will not put bitcoin mining to an end in the region as some worry about, but will raise the bar and costs of mining operations if they have to deal with authorities on issues around power supply, land use, taxation, environmental protection…

To what extent should these government policies influence the bitcoin mining sector in the southwest China and further the bitcoin hashrate? It remains to be seen.

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