Crypto Mining in China’s XinJiang May Pay More for Thermal Power Amid Grids Integration

China’s five state-owned electric companies will form a pattern of “One company, One province” in Gansu, Shaanxi, Qinghai, Ningxia and Xinjiang province, according to a document from the State-Owned Assets Supervision and Administration Commission. The monopoly of state-owned enterprises may lead to the rise of electric charge, thus leaving a negative impact on the crypto mining industry in Xinjiang province.

“Different from Sichuan and Yunnan province, there are few direct-power-supply mining farms in Xinjiang province, but more state-grid-power-supply mining farms that are relatively compliant.”

Said an insider from a crypto mining farm in XinJiang province. In the past, due to the fact that those companies would compete with each other to cut the price in order to capture the market and realize the selling target. After the implementation of this policy, a monopoly similar to that of State-Grid-Corporation is formed, and the market transaction price is bound to rise.

During the year 2017, the local government of Xinjiang was relatively tolerant and there were many direct-power-supply mining farms. In addition, the coin price kept high at that time, which was a heyday for crypto mining. When the price of electricity began to rise in 18 years, the government strengthened supervision, and the cost of grid electricity under compliance was more than 0.27 kW/h Chinese yuan, and it is expected to rise to more than 0.3 kW/h by the end of this year.

Because most of Xinjiang’s coal-power plants are in a loss, the central government also integrates them for the purpose of turning loss into profit, so there is a strong expectation of electric price rise. But half of the thermal power plants are in deficit. Compared with Sichuan and Yunnan province, the price of thermal power in XinJiang province is higher as there are high costs of construction, maintenance, fixed assets depreciation. So the price rise of thermal power in Xinjiang may be an inevitable trend in the future.

The reason for the implementation of the integration plan is that in recent years, due to the excess of the power market, the high fluctuation of coal price cannot be channeled through the rise of the electric price, and the rapid development of new energy squeeze the living space of coal power. The coal-power industry once again entered a difficult period. The huge drop in profits may lead to the possibility of subsequent electric price increase. However, it is also possible that the power consumption is insufficient due to the epidemic, resulting in overcapacity.

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