A large number of Bitcoin "mines" are hidden in the mountains of Sichuan because of cheap electricity prices

According to a report by the National Business Daily on February 21, in the mysterious world of Bitcoin, there is a special link - "mining". As the name suggests, it is to "mine" Bitcoin like mining, and the gathering place of "mining machines" is therefore called a "mining field".

The reporter noticed that due to considerations such as cost savings and convenience of electricity use, Bitcoin, a world-leading financial thing, has now intersected with some small towns in remote mountainous areas of China, and has changed the lives of local people to some extent.

In Mabian Yi Autonomous County, Sichuan Province, tens of thousands of Bitcoin mining machines are "hidden" in several hydropower stations in the mountains, performing "mining" calculations day and night. Some local residents, who knew nothing about digital currency, have become fans of Bitcoin because of the arrival of the "mines".

However, even though they are hiding deep in the mountains, the people here are still very concerned about the changes in the outside market. After all, if you want to play with Bitcoin, you can't just work behind closed doors. Recently, due to the significant impact of the central bank's tightening regulatory policies on the Bitcoin market, the reporter found during the visit that some local residents in Mabian Yi Autonomous County are actually very familiar with the central bank's latest regulatory policies.

On-site: A "storm" blew in the computer room

Starting from Leshan City, the reporter drove for three and a half hours along the winding mountain road and finally arrived at the Bitcoin "mine" of Tianjia Network Technology Co., Ltd. (hereinafter referred to as Tianjia Network) located in Mabian Yi Autonomous County. Along the way, many sections were full of muddy obstacles, and only high-chassis off-road vehicles could pass smoothly.

The Bajiaoxi Hydropower Station of Tianyuan Group, located beside a tributary of the Dadu River, is the location of the largest Bitcoin "mine" of Tianjia Network. The reporter learned that in order to save the cost of laying lines and the convenience of electricity use, most of the Bitcoin "mines" are built directly inside the hydropower station.

The moment you open the "mining farm" computer room, you're hit by a huge wave of noise. Thousands of mining machines are running at the same time, and the noise of the cooling fans makes you feel like you've fallen into a swarm of angry bees - the volume in the computer room reaches 95 decibels, and thousands of ASIC chips are working desperately to calculate and crack the "hash puzzle" and get Bitcoin rewards.

As a virtual digital currency, Bitcoin is generated through a large number of calculations in a specific program, a process called "mining" by "miners". "Mining" is actually using computers to solve a math problem related to bookkeeping - the "hash puzzle". Mining machines perform hash collisions 24 hours a day to compete for the right to record the blockchain. Whoever keeps the account will own the generated Bitcoin.

Next to the buzzing mining machines, dozens of industrial fans run day and night. The placement of thousands of mining machines has been carefully designed to form a large "wind duct" so that huge wind can blow through all the mining machines for better heat dissipation.

"This computer room has nearly 1,500 mining machines, which is the largest one we have here. It can mine nearly 10 bitcoins every day." Lei Ke, the "mine" operation team leader of Tianjia Network, said to the reporter of "Daily Economic News" in a hoarse voice. However, due to the excessive noise, his words were often difficult to distinguish.

Outside the computer room, several "miners" were squatting on the ground, using electric hair dryers to clean the dust from the mining machines. According to regulations, the "miners" must patrol the computer room every hour, day and night, to promptly detect and repair the disconnected or overheated mining machines. During the conversation, several "miners" were discussing the recent Bitcoin market and the performance of a new batch of mining machines.

Less than 200 meters away from the "mine" is the quietly flowing Mabian River. At the Yi primary school halfway up the mountain, many students are happily running on the road. Walking through the lush forest deep in the mountains, a sense of magical realism hits you - this remote and impoverished county in southern Sichuan now provides solid physical support for the most cutting-edge virtual currency.

In addition to the Bajiaoxi "mine", Tianjia Network also owns three smaller "mines" in Mabian Yi Autonomous County. During a field visit, the reporter of "Daily Economic News" found that each "mine" is located in a hydropower station, which is more than an hour and a half away by car. Many of them are rugged and narrow mountain roads, and some places can only accommodate one off-road vehicle. Many times, Lei Ke keeps patrolling between several "mines".

Voice: "Go wherever electricity prices are cheap"

Tianjia Network's "mine" in Mabian Yi Autonomous County is just a microcosm of the many Bitcoin "mines" clustered in the mountains of the southwest. In addition to Mabian Yi Autonomous County, more Bitcoin "mines" are located in another small city beside the Dadu River - Kangding.

Wu Guanggeng, COO of Good Bitcoin, told the Daily Economic News that there are more than 20 companies with Bitcoin "mines" in Kangding, almost forming an industrial chain there. Even the courier boy there is very familiar with the development of the Bitcoin industry.

With the increasing number of Bitcoin "mines" in Kangding and Mabian Yi Autonomous County, Sichuan's Bitcoin mining machine sales have ranked first in the country since 2015, accounting for nearly 30% of the country's total. It is reported that the world's largest Bitcoin mining machine seller has only two repair points in the world, Kangding is one of them.

With the gathering of "mining farms", many "offline exchange salons" and "miner exchange conferences" in the Bitcoin industry have also come to Chengdu, the capital of Sichuan Province. Participants include both government investment promotion departments and some small and medium-sized hydropower stations. The industry circle is gradually formed in this process.

So, why do Bitcoin "mines" have a "special liking" for the mountainous areas of Sichuan?

Lei Ke pointed out that the significant reason is the low cost of electricity. The operation of mining machines requires a lot of electricity, and electricity bills have become the most important expense for the operation of "mining farms". If the Bitcoin "mining farm" is built in a big city such as Beijing, the electricity price may be twice that of a remote mountainous area. In addition, in the city, the huge noise generated by the machines running day and night is also difficult to deal with.

Lei Ke said, "The concept was first proposed by the famous 'Bao Erye' in the industry - Sichuan and other places have abundant hydropower resources. During the flood season, the electricity cannot be used up, and the money turns into water and flows away. So, why don't we take advantage of this and turn the 'money' that flows away into Bitcoin?"

After the "Bao Erye" theory was proposed, the industry responded enthusiastically. Many "mine" owners took immediate action and went to the corresponding areas to negotiate with small and medium-sized hydropower stations. Some people even marked out the small and medium-sized hydropower stations across the country and drew a map. Against this background, at the end of 2013, Tianjia Network, which was originally mainly engaged in hydropower station operations, began to operate Bitcoin "mines". By 2014, various small and medium-sized hydropower stations in Kangding also cooperated with Bitcoin "mine" companies one after another, and large and small Bitcoin "mines" appeared in the mountainous areas of Sichuan like mushrooms after rain.

Talking about the development history of domestic "mining farms", Cui Demin, marketing director of BTC123, told the reporter of "Daily Economic News" that when Bitcoin first emerged, there were no large-scale centralized "mining farms" and the earliest practitioners used computer graphics cards for mining. Due to the slow computing speed of a single graphics card and the residential electricity consumption, "sometimes less than one Bitcoin can be mined in a year, and the electricity bill is not enough, and the graphics card will soon be scrapped."

Nowadays, with the development of the industry, the centralized operation of mining machines has lower costs and higher computing power, and the "mining" link of Bitcoin has gradually developed towards centralization and scale. It is reported that 70% of the global computing power of Bitcoin is currently concentrated in China. In addition to hydropower stations in the southwest, thermal power stations and even wind farms in Xinjiang, Ningxia and Inner Mongolia have become the objects of cooperation for Chinese Bitcoin "mine" owners. In the northwest region, thermal power Bitcoin "mines" have also quietly emerged.

"We go wherever the electricity price is cheap. The electricity price is low in the mountains, the noise is easy to handle, and the climate is more suitable. So after comprehensive consideration, the "mine" is generally built in the form of contracting a hydropower station." Lei Ke explained the logic of "hiding a mine in the deep mountains".

Helpless: Migrating like a beekeeper

Due to the existence of the dry season, operating these Bitcoin "mines" that rely on hydropower stations also has to go through an important step - migration.

In the rainy summer, the electricity consumption of many Bitcoin "mines" is less than one-tenth of the power generated by hydropower stations. But in the dry winter, electricity becomes insufficient. Some "mine" owners need to transport mining machines to Xinjiang, Inner Mongolia and other places, migrating helplessly like beekeepers.

Danger often occurs on the way back. The flood season of the Dadu River is from May to October. As summer is approaching, the "mine" operators need to move the mining machines from Inner Mongolia and other places back to Sichuan. There are often heavy rains on the way, and coupled with the steep mountains and muddy roads, the drivers and "miners" in charge of escorting often encounter natural disasters such as landslides and mud-rock flows.

An operator of a Bitcoin "mine" in Kangding told the reporter of "Daily Economic News" the reasons behind this migration, saying that electricity costs during the dry season are sometimes twice as much as those during the flood season.

The reporter learned that the industry's largest company, "Hao Bitcoin", has nearly 50,000 mining machines in Kangding, and moved the mining machines to Inner Mongolia and Xinjiang in the winter in the past few years. In contrast, Tianjia Network, which has relatively scattered mining machines, often does not need to be a "beekeeper" because the power generation of the hydropower station can meet its needs.

After spending a long time at the hydropower station, "miners" like Lei Ke gradually became friends with the surrounding residents. Over time, some nearby residents also began to pay attention to Bitcoin. In Mabian Yi Autonomous County, a local person met by the reporter of "Daily Economic News" said that after being exposed to Bitcoin, he also set up a mining machine at home, "and can earn nearly 2 yuan a day."

To play with Bitcoin, you need to keep up to date with the latest financial information, including central bank regulatory policies, blockchain technology, computer knowledge, and even programming technology... During the visit, the reporter met several local residents of Mabian Yi Autonomous County who were very familiar with the latest regulatory policies of the central bank. Since the central bank's regulatory attitude has a direct impact on the price of the currency, this is also a hot topic that every Bitcoin practitioner has been paying attention to recently.

At night, most people fall into a deep sleep. The Mabian River is still rushing under the cover of night. In the "mine" of Bajiao Creek, different types of mining machines are still running hard, constantly performing "hash" calculations in another virtual world. "Miners" like Lei Ke still have to get up regularly to patrol, and the green light in the computer room flickers and jumps in the darkness.