Analysis: The Cost of Building a Crypto Mining Farm in China

At present, most Chinese crypto miners choose to trust their miners in the mining farms, but some miners tend to build a private mining farm by themselves as the good mining farm and the bad are intermingled, some ‘black-hearted’ mining farm even provide unstable power and trap contracts from which the crypto miners suffer a lot.

Today we’d like to analyze the cost of building a private crypto mining farm in China. The cost is made up of four major parts:

1. cost of the facility

2. cost of mining machines

3. maintenance costs

4. cost of electricity

The facility cost includes the rental of the land and the cost of the farm construction. The cost of farm construction varies according to different demands,. Hundreds of Chinese is enough for building a relatively simple miner seat, while a well-equipped miner seat requires thousands of Chinese yuan. At present, the average cost of a miner seat is about 500-600 Chinese yuan in China.

The cost of building a small-scale mining farm with 500 miner seats is about 300,000 Chinese yuan. Various factors should be taken into consideration before choosing a spot for crypto mining farm construction.

Friendly Environment

Crypto mining farms need to be built in a spot that is sparsely populated, non-natural disasters, and close to the power substation. Mining farms in China are usually located in Sichuan, a province suffer a lot from floods. Floods in China’s Sichuan cause a lot of damages to cryptocurrency mining operations in the area every year, so the location of high elevation should be given priority before building a mining farm in places which floods frequently strike.

Authority’s Policy

Areas where the government has a relatively tolerant policy on crypto mining should be given priority for building the crypto mining farms. Authority’s policy decides the future of a mining farm, for relocating a crypto mining farm cause great economic loss. China’s Inner Mongolia Autonomous Region has recently issued a notice demanding to clean up cryptocurrency mining operations within the region where bitcoin mining is concentrated.

Low Electricity Charges

Areas where the electricity charges is low should be given priority for building the crypto mining farms. The cost of power is a major part of crypto mining industry. Chinese crypto miners even make a round trip (south-north) to pursue cheap electricity charges every year.

The cost of miners is made up of the cost of miners as well as power supply systems. For example, The cost of the 500 Antminer S17 (including power supply system) is 8,215,000 Chinese yuan.

Maintenance cost is mainly from the cost of hiring maintenance engineers. Two maintenance engineers are necessary for a 500-seat crypto mining farm. In China, wages of maintenance engineers are paid at 8,000 yuan per month at least.

The power transformer is another large expense. Take the frequently-used transformer 3135KVA for example, A 3135KVA transformer is enough for 500 Antminer S17 with the cost of 100,000 Chinese yuan.

The main revenue of trust mining farms comes from electricity charges. The trust mining farms resell electricity with higher charges to the miners to earn the difference. Generally speaking, the floating range of electricity charges is about 0.35 yuan/kilowatt-hour to 0.5 yuan/kilowatt-hour in China. However,  compared with building a private mining farm, trusting the miners to a public mining farm can save huge costs for miners.

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