Why miners do not use cheap energy in China

The Chinese city of Ya'an, known as the world mining center, cannot find miners to sell excess hydropower at a low price.

Ya'an, one of many Chinese cities in Sichuan, an area that is estimated to account for more than 50% of the computing power of the Bitcoin network, recently released a public guide - probably the first - to use the “blockchain sector strategic opportunity” so they can help consume excessive hydropower in the area.

Despite the fact that the guide does not explicitly mention “bitcoin mining” - the indicated “activity in the blockchain industry, which is characterized by the intensive use of electricity” cannot mean anything else.
According to a local newspaper report of April 20, the government is striving to make the city an example of the high quality of excessive hydropower consumption and to become a “powerful blockchain industrial center” in the country.

The Yaan city leadership also emphasized that the electricity that will be used by the “blockchain companies” must come from the generated energy for the state grid.

In principle, blockchain companies should build [their farms] near power plants that have excess capacity and are integrated with the state network. For companies using blockchain that use electricity generated privately from power plants [without integration with the state network], they must be eliminated in a timely manner.

This notice also follows the change in position of the central government of China regarding Bitcoin mining last year.

The National Development and Reform Commission of China, one of the 26 ministries that make up the Council of State, called “Bitcoin mining activity” an industry in April last year that should be excluded. However, the agency abandoned this plan in final form in November.

It is worth noting that spring is usually a favorable time of the year for representatives of 2/3 of world mining. This year, however, two key variables have changed, and now the miners are in a difficult position.