BitDeer Lu Haiyi: How many bitcoins were lost due to China’s “power abandonment” in 2018?

The amount of power generation and the annual growth rate can directly reflect the trend of the country's macro-economy. From the data released by the National Bureau of Statistics, we can see that the annual power generation in 2018 reached 6844.9 billion kWh, an increase of 8.5% year-on-year, 1.9 percentage points faster than the previous year, the highest growth rate since 2012. The quarterly growth rates were 9.8%, 9.0%, 8.0% and 7.3% year-on-year respectively, and the growth rate fell quarter by quarter, but it was generally at a high level. The national per capita electricity consumption was 4956 kWh, and the per capita living electricity consumption was 701 kWh.

By type, hydropower installed capacity is 350 million kilowatts, thermal power is 1.14 billion kilowatts, nuclear power is 44.66 million kilowatts, grid-connected wind power is 180 million kilowatts, and grid-connected solar power generation is 170 million kilowatts. It is obvious that the installed capacity of "wind, light and water" has increased, and the resulting increase in new energy power generation. Among them, non-fossil energy power generation was 2.16 trillion kilowatt-hours , an increase of 11.1% year-on-year, accounting for 30.9% of the total power generation , an increase of 0.6 percentage points over the previous year. Hydropower generation was 1.23 trillion kilowatt-hours, an increase of 3.2% year-on-year. The national grid-connected solar power generation, wind power generation, and nuclear power generation were 177.5 billion, 366 billion, and 294.4 billion kilowatt-hours, respectively, up 50.8%, 20.2%, and 18.6% year-on-year. New energy power generation has become the second largest power generation type in 14 provinces including Inner Mongolia, Xinjiang, Hebei, Shandong, Ningxia, Shanxi, Jiangsu, Heilongjiang, Anhui, and Jilin.

From the overview of China's power generation in 2018, several characteristics can be clearly seen: 1. Power generation capacity continues to move towards green power generation; 2. Non-fossil energy power generation is growing rapidly, and its share is increasing year by year. Although the use of clean energy has brought positive effects on social development and environmental protection, and the country has made great achievements in this regard, it also brings about the problem of "abandoned electricity".

2.1 Overview of power abandonment

In recent years, while accelerating the development and utilization of clean energy, hydropower, wind power, and photovoltaic power generation have encountered problems of difficulty in transmission and consumption. Data show that in 2018, the amount of abandoned hydropower was about 69.1 billion kWh, the amount of abandoned wind power was 27.7 billion kWh, and the amount of abandoned photovoltaic power was 5.49 billion kWh. The total amount of "three abandoned" power was about 102.3 billion kWh, which exceeded the power generation of the Three Gorges Power Station in the same period. Among them, the utilization rate of wind power reached 92.8%, and the abandonment rate of wind power was 7.2%; the utilization rate of photovoltaic power reached 97.0%, and the abandonment rate of photovoltaic power was 3.0%; the utilization rate of hydropower was above 95.0%. Although the amount of abandoned power has decreased compared with before, the total amount of abandoned power is still very high.

2.2 Regional distribution of power curtailment

Let's look at the major sources of power abandonment, mainly wind power and photovoltaic power. I have counted the power abandonment in 2018 as shown in the following table. The abandoned wind and photovoltaic power in Xinjiang, Gansu and Inner Mongolia accounted for more than 90% of the national total. If we look at each province, Xinjiang and Gansu are at the top in terms of the abandonment rate of "wind and photovoltaic" power, both exceeding 10%. For hydropower, the abandoned power is also mainly concentrated in the southwest region where hydropower stations are densely distributed. The abandonment rate in Sichuan and Yunnan is still relatively high.

Through the regional distribution of power abandonment, we can see that the southwest and northwest regions are the hardest hit areas of the "power abandonment" problem. These regions are all inland, with relatively backward economic development and few industrial enterprises. The generated electricity is difficult to be transmitted to the provinces in need of electricity, and it is also difficult for enterprises and society in the provinces to digest the electricity.

3.1 How many mining machines can the abandoned power support?

Let’s take the amount of wasted electricity in 2018 as an example to calculate how many mining machines’ annual power supply can be supported by 102.3 billion kWh of wasted electricity.

Let's take the latest Antminer s17 53T mining machine as an example. In normal mode, the computing power is 53TH/S. According to the information on the official website, the power in normal mode is: 2385W (minimum value), 2860W (maximum value). So we take an average value of 2622.5W/H.

2622.5W *24h=62940W/day=62.9KW/day

62.9KW/day *365 days=22958.5KW

1023*100000000KW÷22958.5KW=4455866 units

If you don’t calculate it, you won’t know that it can support the annual electricity consumption of more than 4 million mining machines. So how many bitcoins can these 4 million machines produce?

Let’s take today’s (2019.9.23) network computing difficulty as an example. The preset difficulty of BTC is 11890594958795 BTC. Using the mini mining calculator on BTC.com, we can get an estimated 0.00112082 BTC to be mined in 24 hours.

Then through mining, we will get 4455866*0.00112082*365=1822891.661BTC, which is about 1.82 million bitcoins. The result is very surprising.

3.2 What opportunities does power curtailment bring to the mining industry?

If we calculate the value of wasted electricity with the value of Bitcoin, everyone will surely sigh at how precious energy is. But for the mining industry, how can we mine this wasted electricity and make use of it? This is an opportunity for everyone, but also a challenge.

The country has also introduced a series of policies to address the "three abandonment" problems. For example, in 2018, the National Energy Administration stated in the "Implementation Plan for Solving the Problems of Abandonment of Water, Wind and Solar Power " that "the overall principle is to give play to the decisive role of the market in resource allocation, better play the role of the government, and use reform and innovation to solve the problem of clean energy consumption." The "Clean Energy Absorption Action Plan (2018-2020)" also puts forward new requirements and goals for the problem of abandoned power consumption, stipulating that by 2020, the abandonment rate of all types of power generation will be reduced to below 5% and "strengthen market promotion capabilities and expand the scope of energy allocation."

The country has introduced a series of policies, and the corresponding provinces in Xinjiang, Gansu, Inner Mongolia and the southwest region are faced with the task of implementing the policies and achieving the goals. In the market mechanism, the electricity demand in the production of digital currency can naturally be combined with "abandoned electricity", solving the waste of natural resources while generating value.

Therefore, in terms of the regional distribution and time patterns of abandoned power, there are two opportunities that the mining industry must seize: 1. Absorbing abandoned power during the "flood season" in the southwest region; 2. Absorbing abandoned power from "wind and solar" plants during the "dry season" in the northwest region.

Quote:

1. "2018-2019 National Electricity Supply and Demand Situation Analysis and Forecast Report", China Electricity Council,

http://www.cec.org.cn/yaowenkuaidi/2019-01-29/188578.html

2. Clean Energy Consumption Action Plan (2018-2020), National Development and Reform Commission,

http://www.ndrc.gov.cn/gzdt/201812/t20181204_922173.html

3. Explanation of “Wodian”, Baidu Encyclopedia,

https://baike.baidu.com/item/%E7%AA%9D%E7%94%B5/4527735?fr=aladdin