So what has been happening in China’s bitcoin mining scene?
The recent announcement, in May, by the regulatory bodies in China on their stance on cryptocurrencies and bitcoin mining have spawned a fresh wave of fear throughout the crypto industry. These regulatory bodies, which include the National Internet Finance Association of China, the China Banking Association and the Payment and Clearing Association of China, and even the People’s Bank of China have all expressed the same rhetoric on their views towards crypto. Warranted or not, it definitely has caused immediate knee-jerk reactions from speculators and bitcoin miners alike. The sudden reaction also subsequently led to a drop in the price of bitcoin which also could be viewed as a healthy correction needed for bitcoin’s trading price.
Nevertheless, the announcement and reiteration of China’s stance on bitcoin mining has also led to many provinces to react with a firmer control of energy usage. Specifically, local municipalities and provincial level administrators are curbing the amount of electricity being used specifically by crypto mining farms.
There have been many reports and rumors of miners from the historically popular mining provinces of Sichuan, Xinjiang, and Inner Mongolia, moving out entirely to more favorable local environments that have a positive view towards bitcoin mining. In the past, excess hydroelectricity, stemming from the myriad rivers in Sichuan, as well as comparatively cheap coal sources in Xinjiang and Inner Mongolia, have been abundant in those regions. But as China’s energy grid matures and develops more, restrictions on those privileges are being enforced more. And from insiders and analysts that cover the bitcoin mining landscape, many foresee a significant amount of miners moving out to avoid the enhanced aggression towards miners. We already see a large booming mining scene in places such as Kazakhstan and North America.
As a dominant and strong mining team in China, 1TMine has benefited from the unique location we have been in, but at the same time, we also need to adapt to policy changes and the moving trend of bitcoin mining. China has been our home and the land we have been able to prosper from. From the cities we live in to the remote villages where we plot our mining farm, we have always believed that what we did was noble and beneficial to all parties. As many know, the proof-of-work emergent consensus of bitcoin is crucial to the security of a decentralized network. And to those who think we just suck up energy and profit from it, we’ve always placed the needs and priorities of the communities around us in mind. Please take a read of one instance of our philanthropy efforts given in a small village in Sichuan here.
With that being said, we have started to initiate more overseas partnerships with power suppliers and mining farms in seeking a mutually beneficial relationship, ultimately continuing the mission in powering the Bitcoin Network by providing robust hash rates. This is also a reflection of the sentiment of many bitcoin miners across Mainland China as this “great mining migration” unfolds before our eyes.
Why is China doing this?
It’s also imperative to understand why these regulatory bodies in China want to enforce such policies. According to Newton’s Third Law of Motion: Whenever one object exerts a force on another object, the second object exerts an equal and opposite force on the first. And it is the reaction that can be misconstrued in many ways but hopefully the intent of the original action can be interpreted correctly and with reason. From our point of view and based on what we have noticed, the shortage of coal in China is one reason for the curbing of these natural resources being used for bitcoin mining. Coal could be used for other activities the government may view as more favorable for the community.
Another reason is the concern for the environmental impact of bitcoin mining activities. Although this argument can be flawed to some extent and both sides have a strong rebuttal, we see bitcoin mining as a harbinger for seeking the most efficient green energy sources out there and a proponent of eliminating wasted energy. A third reason we see is that there is a focus on manufacturing in China with an eager to upgrade it through healthy development. A fourth reason is the regulatory bodies’ mantra on ensuring financial stability for the country. As we all know, the RMB is the only legal currency that can be used in Mainland China. As the globalization of the RMB continues to propagate, the country’s goal of seeing this through is still prevalent.
Hydro-electricity
As alluded to earlier, Sichuan, where most of our team members and headquarters are located, has been a hotbed for hydropower stemming from the major river networks here. There’s an idiom in Chinese that goes “开源节流“ (kai-yuan-jie-liu), which in its figurative meaning means to increase income and reduce expenditures. It’s literal meaning means to open the water sources and reduce outflow. The water aspect is very relevant to Sichuan. The name Sichuan, 四川, is mistakenly referred to as the land of its four rivers: 金沙江，嘉陵江，岷江，and 沱江. This makes it the ideal spot for producing hydropower. Over the past decade, in order to support its aluminum producing industries and eliminate coal production, the Chinese government has commissioned dozens of new dams and hydroelectric producing facilities. But with recent developments of the Sichuan government ordering state-owned power grids to cut the energy supply for 26 local mining farms as an initial target, the future in what we call home is rather dim. This is why many miners, including new miners, have been seeking hosting havens outside of the country. Even though the stable electricity and well-managed mining farms are preferred by Chinese miners, the incoming restrictions may change that.
Going forwards, what’s next?
VHash is an innovative platform with a laser-sharp focus on building the blockchain ecosystem that integrates cutting-edge technology and resources with a global perspective, connecting the physical and digital world with blockchain technology. VHash has established itself as a hash power market leader.
VHash team has been running mining operations since 2013, built the first mining facility in Sichuan, China. VHash has accumulated years of experience in mining operations and has become an influential force in the digital currency industry. Currently, VHash has built mining facilities in major regions in China with energy preferential policies, including in Sichuan, Inner Mongolia Autonomous Region, Yunnan, and Xinjiang. VHash’s world-leading hash power is consistently above 10,000P, and the company owns a global top 10 hash-power mining pool.
As we realize the current situations and trends, we therefore need to adapt and change. Just like the waters we used for energy. To echo what the late great Bruce Lee has said, “Be like water”. We now want to start and look for partnership opportunities in other countries as a way of maintaining the true ethos of bitcoin mining. Existing well managed mining farms and energy suppliers are some of our ideal partners we are seeking for. In details, we are looking for some of the characteristics set below:
1. Site
Potential mining farm sites would mainly include the approval and lease of land. The following factors will also be considered in the selection of the mining farm location:
a. Environmental factors. The mining farm needs to be built in a less populated site free of natural disasters, and close to an electrical substation.
b. Policy considerations. Mining farms need to be established in areas where the government has relatively loose policies on crypto currency mining.
c. Cost of electricity. The cost of electricity is the most important factor for the site selection.
d. Land size. Typically, a 50,000 KWH power-consumption mining farm requires around 10 acres of land.
2. Electric Capacity
The power consumption varies from site to site. Typically, a mining farm requires anywhere from 10,000 kW to 500,000 kW of electrical power. Closer to electric substations or hydro power stations is a plus.
3. Electricity Cost
An average cost of USD 0.03 or lower with a year-round stable supply is required.
4. Sources of Funds
Mining farms construction costs will be provided by an overseas USD investment fund.
Thank you for your time in reading this and we hope to develop strong, fruitful relationships with overseas partners that will last indefinitely. For further contact and interest, please reach out to the below contact:
International Business Development, VHash
Email: BD@vhash.io, sheryliu@vhash.io
Mobile: +86 18708143771, +1 5103207031
Skype: Trissea
Telegram: @Trissea
