Markets, not floods, will drown bitcoin miners · TechNode

Picture a remote village tucked at the end of a winding road. Towering overheard are the peaks of the world’s tallest and largest mountain range. It’s the perfect place for bitcoin miners to set up shop.

Mountains invite rain, and, in modern China, rain is just begging to be channeled through gargantuan dams into electricity generators. The Himalayas have made the southwestern province of Sichuan home to abundant dams and, during the rainy season, incredibly cheap electricity.

Normie tech entrepreneurs haven’t flocked to these inaccessible secluded villages to take advantage of it. But bitcoin miners have swarmed the area, consuming as much as 10% of Sichuan’s total electricity, by some accounts (in Chinese).

But this year could turn out to be just too wet. On June 17, Chinese media reported that a hydroelectric power station had been swept away by debris and that many local mines were destroyed in Ganzi prefecture in western Sichuan. Across China, this year’s floods have already killed more than 121 people and caused $3.6 billion in damages.

But these epic floods are the least of the miners’ worries.

Bottom line: Crypto mining is traditionally a wildcat industry, inhabiting a legal grey area and the remotest regions of China. As the industry professionalizes, local authorities are embracing it. The private sector is stepping up to offer financial products to bitcoin miners.

Three forces shape bitcoin mining in Sichuan: hydro power, regulations, and the markets. Both regulators and market favor big mines. As the industry consolidates, small mines face going out of business or selling out to mining tycoons.

Bitcoin mining requires a lot of electricity, and keeping this cost low is essential for a sustainable mining business. During the rainy season, Sichuan’s massive hydroelectric power stations produce a lot of power, with local prices as low as $0.01 per kilowatt hour.

Heads above water: But miners reached by TechNode were not worried about the floods and said they had not been affected. It’s business as usual, they said. Every year the floods destroy some mines, but provide cheap power for the rest.

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