You may have heard that the blockchain mining industry took a hit last year as the prices dropped and mining started to be unprofitable in some regions. Because of this, there is a migration of miners who want to go to the Sichuan province as the rain season has started.
Every year, the Sichuan province, which uses a lot of hydroelectric energy, gets an influx of crypto miners who are interested in using its cheap energy (which gets even cheaper at this time of the year). This year, then, the influx is even bigger because of the crisis that the mining sector is currently facing.
Eva Xiao, a journalist from China, has affirmed that at one point last year, 70% of all the mining power in the country came from the Sichuan region. The hydropower stations get over-capacitated and are able to offer cheaper energy for the users during the rainy season.
Crypto miners often made partnerships with the power stations in order to get discounts as their services were very power-intensive and both sides could profit from that.
As prices started to rise, many Chinese mining companies have started to sought subsidies with their local governments instead of going to Sichuan, but it looks like this may be about to start again now. According to the vice president of BTCC, Zhao Qianjie, which is cited by Xiao in her report, companies who do not want to worry too much about the stability of their energy make partnerships with the government.
Migration Will Probably Be Temporary
However massive this migration might be, the reality is that it may not be more than something temporary. This is a seasonal movement that happens almost every year and is more intensive now because of all the issues that the industry is facing at this time.
At its highest point, China was responsible for over 70% of the world’s mining hash. However, the fall of the crypto prices has started a mass sell-off of mining rigs in the country.
Everybody is rushing to get out of the mining industry, and the ones who stayed want more profit. After the rain season stops, the miners who decide to stay in the game will possibly go to other locations again.