Due to lack of electricity: China is forcing Bitcoin miners to mine less Bitcoin

With the approaching dry season, Bitcoin miners in the Chinese province of Sichuan are forced to reduce their electricity consumption.

Local electricity needs have priority

According to the Asia Times, the authorities in Sichuan Province, China, are encouraging Bitcoin miners to reduce electricity consumption. The news follows the start of the dry season in southwestern China, which usually lasts until April.

Power outages occur in Sichuan Province during the dry season, as the region’s main electricity supply comes from hydropower plants. According to local government sources, authorities expect electricity demand to increase by 30% over the previous dry season.

As a result, the authorities are reportedly looking for ways to ensure the “normal” electricity consumption of the population.

Some hydropower plants have already received fines totaling $ 140,000 for supplying electricity to Bitcoin miners in Sichuan Prefecture without prior approval from the local government. In early December, the Asia Times reported that the authorities even subpoena Bitcoin miners to discuss tax and regulatory issues.

The Sichuan province controls about 50% of the global bitcoin hash rate. Miners based in the region may need to move to regions that primarily use thermal power sources.

Inner Mongolia, however, may no longer be an option during the dry season. Already in September, the authorities in the region started a systematic raid on Bitcoin mining activities. In November, China’s National Development and Reform Commission (NDRD) removed Bitcoin mining from the list of prohibited industrial activities.

The administrative hurdles faced by Chinese Bitcoin miners could cause their western colleagues to attack the dominance of Chinese Bitcoin mining over the winter months.
Hard year for bitcoin mining

While affected Bitcoin miners in Sichuan Province are considering how to cope with the situation, 2019 has been reported to be an overall difficult year for mining. Despite the hash rate and the difficulty of climbing to an all-time high, the mining pools have suffered significant losses.

Unlike at the end of 2018, there has been no surrender of the hash rate as the miners didn’t seem deterred by the flat and sometimes negative price action in Q4 2019. Some believe that exposure to the futures and options market could result in miners showing more staying power and having access to risk hedging instruments.