Bitcoin mine illegally built near Dadu River, Kangding City launches special cleanup

Bitcoin "mine" illegally built on the bank of Dadu River

Kangding City has set up a working group to carry out special cleanup

The mine factory building by the Dadu River is only a few meters away from the river. Huaxi Metropolis Daily-Cover News reporter Tian Xuejiao and Chen Yuanyang took photos to report

Player Secrets

"Mining" consumes a lot of electricity. Mining farms are interested in direct power supply from power stations.

On May 28, Bitcoin climbed to US$8,903 (about RMB 61,000), another new high since 2019.

Xiao Wu (pseudonym), a veteran "miner", said that although he does not speculate in Bitcoin, as a person who owns thousands of "mining machines", he pays close attention to the Bitcoin market. Starting from April 30 this year, Bitcoin started to rise, rising from more than 5,000 US dollars. In less than a month, it broke through the 6,000, 7,000, and 8,000 US dollar mark, and once approached 9,000 US dollars.

"This has led to more and more people engaging in 'mining'." Xiao Wu said that although China has closed down Bitcoin trading platforms and deemed it illegal, its attitude towards Bitcoin "mining" has not been clear. Because of this, 70% of the world's Bitcoin is produced in China, and 70% of China's "minerals" are in Sichuan, especially in the Dadu River Basin, which has abundant hydropower.

Since Bitcoin mining requires a lot of electricity, China's Bitcoin mining farms are often located in remote areas with developed electricity and low electricity costs, such as Xinjiang, Yunnan, Inner Mongolia, Sichuan, etc. A saying circulating in the industry is: Sichuan has become a natural "mining capital" for Bitcoin.

Xiao Wu said that miners can mine more than ten bitcoins a day at most. Even though the mining income is extremely high, nearly 50% of the income has to be used to pay for electricity, so the mine is interested in the direct power supply from the power station.

Xiao Wu revealed that because the power station does not need to be connected to the national grid, the cost is very low. Many mines are built directly in or near the power station and build their own substations. "After getting off the expressway, we turn to the national road, then turn to the provincial road, and then turn to the county road. The mines are built in such deep mountains."

"Because it is Bitcoin mining, the factory project cannot be approved, there is no environmental impact assessment or construction permit, and it is suspected of being built illegally. The direct sale of electricity by the power station also violates the Electricity Law." Xiao Wu said that this is the current situation of most "mines". The closer the "mine" is to the power station, the more money it saves.

Journalist Investigation

The factory was built by the Dadu River and mining machines were transported here from all over the country

On May 28, reporters from West China Metropolis Daily and Cover News went to the Dadu River basin in Kangding City, Ganzi Prefecture. Leaving Guza Town and heading towards Danba County, they saw black steel-framed houses on both sides of the Jinkang Hydropower Station under China Datang. Xiao Wu took one look and concluded that it was a "mine."

The guard at the Jinkang Hydropower Station said that these are indeed mining plants, which were built in 2017 and put into use in 2018. They are operated independently from the power station. "The plants were built by an outside company, and they also leveled the land themselves."

The shortest factory building is located on the bank of Dadu River, only a few meters away from the river surface. It is separated from the power station's office buildings by a newly built concrete wall, and is connected to the factory building by a transformer unit separated from the power station by a wall.

Entering from the Changheba Power Station Tunnel behind the Jinkang Power Station, there are four three-story factory buildings by the river. The security guard guarding the tunnel entrance said that the factory buildings here have already started "mining", and the people guarding the factory buildings can bring in "customers" from outside for a visit.

When entering the plant, water mist discharged from the power station drifted in, and the staff jokingly said: "This is natural cooling water shower."

Large fans running at high speed are installed on the walls of the buildings in the "mine". Densely packed mining machines are placed in front of the fans in the factory. In front of some vacant machine positions, many workers are busy installing machines.

According to the staff, the factory was invested and built by an enterprise in Zhuzhou, Hunan. More than 30,000 mining machines have been placed inside, and more than 50,000 machines are fully loaded. "We only accept models above S9. The electricity price can be discussed with the person in charge of the company."

Xiao Wu said that the S9 mining machine is a relatively new mining machine, which is characterized by faster computing speed. According to the staff, the annual power consumption of this "mine" exceeds 500 million kWh. "According to the market conditions in the industry, the electricity price should be around 2.8 cents, not more than 3 cents."

According to the staff, the mining machines here come from all over the country, mostly from Sichuan, Hunan, Jiangsu, Shenzhen and other places. The owners of the machines host their mining machines in the "mine farm". After they pay the electricity bill, machine fee, deposit, etc., they just wait for the coins to be produced.

"During the flood season, mining machines return to Sichuan one after another." Xiao Wu said, "Mining" is like migratory birds, migrating to Inner Mongolia and Xinjiang in winter, and returning to Sichuan and Yunnan in summer where electricity prices are lower.

A mine owner revealed that because the power supply agreement with the power station was signed slowly, the construction of the plant could not go through the environmental impact assessment and construction approval procedures first. "This is very common in the Dadu River Basin. After the construction is completed, we have to find a way to complete the procedures."

Department response

There are indeed illegal structures, and a working group has been set up to conduct a survey.

Regarding the phenomena found during the visit to Jinkang Hydropower Station, the reporter sought confirmation from the Kangding Municipal Ecological Environment Bureau. The relevant person in charge of the bureau's law enforcement brigade stated that Jinkang Hydropower Station had relevant environmental impact assessment filings.

It is reported that the Jinkang Hydropower Station was built more than 20 years ago, and the plant was built in 2017. Does it need to be re-evaluated? The above-mentioned person in charge explained that the plant has been completed and the illegal construction should be supervised by the housing and construction department. "We only supervise their illegal behavior. They did not discharge sewage or waste residue into the river, so we cannot investigate and deal with it."

Subsequently, the relevant person in charge of the Kangding Municipal Housing and Urban-Rural Development Bureau stated that their supervision scope is the construction land within the plan, and the competent department for the hydropower station is the Development and Reform Commission.

A staff member of the Kangding Municipal Development and Reform Commission Office responded that they only approve and supervise projects under construction. "We have not received any application for approval for projects related to Bitcoin 'mining'. There are currently no projects under construction at all hydropower stations in our jurisdiction. If there are any illegal constructions, they will be supervised by the land department."

The relevant person in charge of the Kangding Municipal Bureau of Land and Resources said that some towns have reported that there are indeed cases of suspected illegal construction of Bitcoin "mining" factories. At present, a working group has been set up under the leadership of the Bureau of Economics and Information Technology, and is currently conducting a thorough investigation. After the cleanup, it will be dealt with. "If it is within the approved land use range of the power station and has legal procedures, the power station needs to verify whether the use is legal; if it is outside the planning scope, it is a case of construction without approval, and it must be dealt with."

"We are still in the investigation stage and the overall situation cannot be explained yet." The above-mentioned person in charge said that the working group led by the Economic and Information Bureau is still investigating, including whether the power station is selling electricity in violation of regulations.

On May 28, the relevant person in charge of the Kangding Municipal Bureau of Economics and Information Technology said that Ganzi Prefecture does not allow Bitcoin "mining" and they have not yet received the relevant project filings. "If Bitcoin is included in the investment promotion, it is not allowed. We also need to conduct data investigations on big data projects before making decisions."

Source: West China Metropolis Daily

Reporter Tian Xuejiao Chen Yuanyang