25,000 Bitcoin Miners in Sichuan: Fear Power Outage and Loneliness Most
There are about 5 million bitcoin mining machines and 25,000 crypto miners in remote parts of Sichuan, a province in southwest China where hydroelectric energy is abundant and cheap.
There thus comes the claim that 70% of the currently available hashing power directed at bitcoin stems from China, among which 70% comes from Sichuan.
It also explains why a recent flood in this “bitcoin mining capital of China” has led media and investors in the cryptocurrency sector to speculate its impact on the hashrate of bitcoin.
Though analysts have claimed Sichuan floods had little impact on the bitcoin hashrate, what happens in Sichuan, the so-called “bitcoin mining capital”, still matters in the hashrate world.
“More than 2,000 mining rigs, but we couldn’t salvage them at all, only to watch them being drown in the flood,” said Li Yang, a miner based in Sichuan.
Purchased at CNY5,000 (US$750) per unit, these 2,000 mining rigs, salvaged three days later, turned into a stack of crap. Li lost 10 million yuan ($1.5 million) in the rainstorm.
A few of cloud mining providers saw the opportunity in it. They wanted to recycle these damaged mining machines whose parts might still work if fitted in their own devices, offering 50 yuan for each unit.
Sichuan has the most abundant hydropower in the country, with over 20 hydropower plants scattered along a main river there. In wet season, the cost per kilowatt hour of hydroelectricity is as cheap as 0.08 yuan, one third the price of thermal power.
Cheap hydropower attracts miners to flood there. There are currently 5 million bitcoin mining machines, 25,000 miners, 600+ large and medium-scaled mines (with a capacity of over 2,000 mining machines), and small mines that cannot be counted.
Most crypto mines sit next to hydro plants. A 5,000 square-meter mining farm can contain 40,000 mining machines. In dark and isolated warehouses, you can hear bitcoin mining machines humming even 10 meter away.
“The first time I saw this, I felt I was in the film of Matrix,” Li says.
Tired of the routine boring work, in 2017 Li set up a mining farm in Sichuan and began to provide miner hosting service.
“It is easy to do this business. Many people want to mine bitcoins themselves, but they find out that the cost for it is rather high. In this context, we provide hosting service for them, and what clients need to do is only to pay for the mining machines and monthly electricity cost. Then they can monitor the mining progress remotely via apps on their mobile phones.”
He charges 0.45 yuan to 0.5 yuan per kilowatt hour. Given 1,000 Antminer S9 could mine 14,000 yuan ($2,100) worth bitcoins per day, after deducting 10,000 yuan cost on electricity, Li can easily earn 4,000 yuan a day. That would be 1.46 million yuan for a year. That means, a small-scaled mine with only 1,000 mining machines is highly likely to make 1 million ($150,000) a year.
However, it is not that easy to make the money.
“Do you know what I fear most? Power outage and loneliness.” Li said, “power cut means losing money, but being alone is more painful and torturing.”
Living in remote parts, they can only turn to WeChat and online games to kill time.
Large mines remain unscathed, and small mines are struggling despite government crackdown, pessimism and now natural disaster.