Tencent Finance: Power company "power outages" squeeze Bitcoin mining farms' living space

After domestic regulators required the closure of Bitcoin exchanges, the upstream of the Bitcoin industry chain - "mining" - also began to be affected.

On November 14, Tencent Finance's "First Line" learned from Bitcoin miners that a power company from Sichuan has issued a notice stating that using electricity to produce Bitcoin is an illegal operation and requires that all grid-connected hydropower stations must stop Bitcoin production, otherwise they will be "punished by being disconnected from the grid."

"Mining" is a jargon in the Bitcoin world, specifically referring to using the computing power of chips to continuously perform "hash collisions" in the blocks generated by the Bitcoin system to win the right to record accounts and thus obtain Bitcoins rewarded by the system. This boring and repetitive process is figuratively called "mining" in the Bitcoin industry.

The biggest expense in the mining process is the initial investment in mining machines and the huge amount of electricity consumed by the daily operation of mining machines. In order to reduce production costs, most Bitcoin mines are "located with electricity". Tencent's Prism previously reported that China has the largest number of Bitcoin mines in the world, benefiting from the abundant electricity resources in Inner Mongolia and Sichuan, and has a monopoly on the production of Bitcoin. A Bitcoin mine owner once told Tencent Finance, "Sichuan has the most water resources in the country, and there are thousands of large and small hydropower stations. There is plenty of electricity. In many cases, due to the oversupply of electricity, some water that should have been used for power generation can only be released in vain. We call it 'abandoned water'." Bitcoin saves these "abandoned waters". The water that was originally required to be released from the hydropower station is used to supply Bitcoin mines for power generation. The hydropower station earns huge profits, and the miners get the cheap electricity they have always dreamed of.

However, with the tightening of domestic regulation on Bitcoin exchanges and the conflict of interests between power companies and small hydropower stations, the power supply that Bitcoin mines urgently need has gradually been tightened by local power companies. A miner told Tencent Finance that Sichuan has issued a notice at the policy level, requiring that no new small hydropower stations be built; on the other hand, power companies are stepping up the acquisition of small hydropower stations to promote the latter's power grid connection, and the space for Bitcoin mines to use electricity at low prices is becoming increasingly narrow.