Profit Loss of China’s State Grid Leads to Crackdown on Bitcoin Mining Electricity Supply
The dumped profits of China’s state grid may lead to pressure on hydropower stations to reduce electricity supply for bitcoin mining farms in China’s Sichuan, Yunnan province, which is home to some of the largest crypto mining operations in the world.
On July 22, Mao Weiming, the chairman of China’s State Grid, disclosed that the net profit of State Grid in the first half of this year was 5.66 billion Chinese yuan, down 81% compared to the previous year. However, to stimulate the economy after the epidemic, the government proposed to “promote the reduction of production and operation costs of enterprises and reduce the electric charge of industry and Commerce by 5% until the end of the year”, thus the State Grid is facing greater revenue reduction.
For the bitcoin mining farms, it may mean that the direct power supply of hydropower stations will be restricted. The power consumption of crypto mining will be included in the income category of the State Grid, and hydropower consumption will be supported.
On Jun, Sichuan province issued a document emphasizing the protection of compliant mining farms and cracking down on crypto mining farms with direct power supply. Power plants transfer power to blockchain enterprises without authorization are in violation of the power purchase and sale contract signed with State Grid of China as well as being in violation of power law.
At the beginning of May, multiple local governments in Sichuan, including Ya’an, have shown their support. They have also encouraged cryptocurrency mining operations to help consume excess hydroelectric power during the rainy season. In that way, they would recover from the economic losses due to the coronavirus outbreak.
Recently, due to the high temperature in Sichuan province, the power consumption reaches its peak, and a large number of bitcoin mining farms have been cut off from electricity supply.
This year, the power grid frequently adjusts the load of hydropower stations to the grid, which aims to make the direct-electricity-powered mining power off, thus forcing miners to use the power from their park. Some old farms with direct power supply, which were very stable before, were frequently regulated by the power grid this year, resulting in frequent powered off, mining machines were also damaged due to frequent power outages.