Sichuan’s Garze Demands a Cleanup of Bitcoin Mining Operations to Give Priority to Social Electricity Demand

Authorities in Sichuan have started pressuring cryptocurrency mining businesses operating in the “Bitcoin mining capital” amid the dry season which has been leading to a shortfall in electricity supply.

As per the notice issued on December 23 by Garze Tibetan Autonomous Prefecture of western Sichuan province in China, local government would convene a meeting on December 25 involving a cleanup in the bitcoin mining sector, with the participation of 12 other regulatory bodies including department of natural resources, tax bureau, local branch of the State Grid, etc. Local power plants and ten companies associated with bitcoin mining including a Bitmain-owned firm were also required to attend the meeting.

8btc has reached out to relevant departments and learned that the meeting scheduled for December 25 has been postponed to December 27. An official told us that the aim of the meeting is to collect opinions from all parties on the phase-out of bitcoin mining operations, which is definitely not a one-size-fits-all shutdown.

The move is part of local government’s efforts in ensuring enough power reserve for residents’ normal electricity consumption during the dry winter within the region. Analysis indicates that the region’s monthly social electricity demand this winter will increase by more than 30% compared with last year.

The abundant hydropower resources during the wet season (May to September) as well as the cold climate in Garze have made it one of the world’s largest concentrations for bitcoin mining.

While since 2018, the region has been regulating the bitcoin mining sector in the name of cleaning up illegal constructions without official approval and controlling noise pollution. The head of Kangding (a county in Garze) government told us that bitcoin mining farms do not pay any taxes or fees to local authorities, but a large number of migrant machine maintenance personnel, the hanging wires and loud noise and heat mining machine generated, have posed high risks to the public security and environment in the region.

On May 28 this year, an official from the economic and information bureau said that Garze does not allow bitcoin mining operations.

“We don’t allow outside investment in the area to be involved in bitcoin. Even for big data projects, we will conduct an investigation into the nature of the project before making a decision.”

Governments in China have been taking an equivocal position toward bitcoin mining. On the surface, they vocally do not welcome bitcoin mining as Beijing keeps cracking down on crypto-related activities; Well in fact, they are willing to turn a blind eye to them as long as those mining operations keep low-key and stay out of troubles.

At present, Garze is in the dry season (October to April) when power supply is limited. Power plants need to give priority to ensuring the social demand for electricity and there is no surplus electricity for mining. In such a context, a number of bitcoin mines have relocated to areas where thermal power is concentrated such as Xinjiang or Inner Mongolia.

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