Chinese Bitcoin Mining Hub Sichuan Shutting Down Over Two Dozen Operators
While good for the decentralization of bitcoin mining, China shutting down bitcoin mining operations is “not healthy” for the cryptocurrency because it lowers the historic price floor for BTC.
Amidst the ongoing crackdown on crypto trading and mining in China, Bitcoin mining in Sichuan is being shut down.
One after another, mining operations in Sichuan are shutting down due to regulatory pressure, with some miners expecting restrictive policies to be introduced soon, as per local publication Wu Blockchain.
The Sichuan Energy Bureau and the Sichuan Development and Reformation Commission jointly issued a document on Friday to state-owned power generators and distributors ordering them to close down local bitcoin miners.
This measure is expected to impact about 26 mining operators directly.
Sichuan gov. announced to clean out & shutdown 26 mining farms located in Sichuan. 2 and 3 is the list of the name of the mining farms getting shutdown. pic.twitter.com/0mqTHYMnCq
— Molly (@bigmagicdao) June 18, 2021
“What's messed up is many of the 26 embraced the reg in 2020. Filed their names, paid fees, and allowed to operate in gov-sanctioned hydro consumption parks. Now they get thrown under the bus, while many smaller farms may actually get away by staying under the radar,” said journalist Wolfie Zhao.
So far, this has resulted in a decline of 7% in the Ethereum hash rate, while Bitcoin's hash rate is temporarily not reflecting the effect.
Interestingly, the province is China’s biggest producer of hydropower and offers cheaper electricity tariffs.
“There is a large amount of abandoned hydropower in Sichuan in summer. If it is not used for bit mining, it can only be wasted. The implementation of this policy is currently uncertain,” noted Wu Blockchain.
Sichuan actually sees a lot of activity during the rainy season, which lasts from May to September. Every year, at the end of the rainy season, miners start migrating to other regions.
So, it is possible, another big bitcoin miner exodus out of China may happen.
Amidst this, Toronto-based Bitfarms is getting listed on Nasdaq to become the largest publicly traded Bitcoin miner in North America using more than 99% hydroelectric renewable electricity.
While good for the decentralization of bitcoin mining, Charles Edwards of Capriole Investments says China mining FUD is not healthy for Bitcoin because
“It lowers the bitcoin electrical cost, the historic price floor for Bitcoin. This is the price Bitcoin almost never goes below, and it's been falling.”