Carbon neutrality hits the mining industry? Foreign media says Sichuan electricity prices will rise by 150%

Bitcoin's global hashrate fell 10 days ago after a coal mine accident in Xinjiang, China, caused severe power outages in the region. Although initial estimates showed a more than 40% drop in hashrate, five-day average statistics show only a 25% loss in hashrate. However, miners in Sichuan, China, may face greater pressure on hydropower resources as provincial officials revealed that electricity prices in Sichuan are scheduled to rise by 150% this year.
Bitcoin mining is highly competitive, with miners located around the world to get the cheapest electricity prices possible. A large number of Bitcoin miners live in China, as electricity costs there are much lower than in many parts of the world.
A few years ago, China had over 65% of the hash rate, while more recent studies show that China only accounts for around 50% of the hash rate.
Following the recent hash rate drop, a regional report states that electricity costs in Sichuan may increase. Financial columnist Priyeshu Garg explains that electricity in Sichuan powered by carbon materials will increase by 150% this year.
The report comes from the Sichuan Provincial Electricity Trading Center, which disclosed the price of electricity after the price increase on April 10, 2021. However, non-mining entities may be aware of the increase in electricity costs in advance, and local officials hope to reduce their reliance on coal-fired power.
As coal electricity prices rise and carbon-based power facilities are phased out, demand for hydropower is expected to rise.
China’s carbon neutrality policy aims to reduce its reliance on carbon-based electricity, so non-mining entities will also be forced to use hydropower. Bitcoin miners in Sichuan are already using hydropower in the region, with electricity costs around $0.02 per kilowatt-hour.
Priyeshu Garg said that the electricity price of $0.02/kWh is relatively cheap, but it has also increased by 16% since last year. The report of Sichuan Electric Power Exchange Center estimates that by 2021, Bitcoin miners alone will consume 11.3 billion kWh.
The reporter pointed out that with the upcoming rainy season, more Bitcoin miners are expected to flock to Sichuan. Therefore, this will increase the dependence on all hydropower resources, and if other non-mining entities are competing for this type of electricity, hydropower may follow the price increase.
The Sichuan Electricity Exchange Center noted that currently available hydropower is in short supply.