With Chinese media estimating that Sichuan’s mining sector comprises 70% of the computing power of both the bitcoin network and the total processing power situated within China’s borders, reflections following the devastating Sichuan floods’ have many insights into the realities of life of a crypto miner in Sichuan.
Also Read: Change.org Petition Attempts to Fight for Ross Ulbricht’s Freedom
Floods Wreak Havoc in Sichuan
According to Chinese media outlet Jiemian, prior to the floods, roughly 5 million mining rigs owned by approximately 25,000 people were situated in Sichuan. The recent flooding in the province resulted in the streets being littered with broken mining rigs, as the entrepreneurs seeking to cash-in on the nascent next boom industry were forced into a state of survival.
Li Yang, a cryptocurrency miner based in Sichuan, discussed his firsthand account of the flood with Jieman, stating that unusually heavy rainfall began to besiege the province in June. Before long, the local hydropower station had cut the electricity provided to many miners – with Li Yang’s being among those to lose power.
At 10 am, on the 26th of June, Li Yang recounts that the water level quickly soared, resulting in the destruction of tens of thousands of mining rigs situated at low altitude – including those belonging to Li Yang. With each of Li Yang’s 2,000 mining rigs estimated to have cost 5,000 yuan each, the floods caused a total loss of 10 million yuan (approximately $1.5 million USD).
Li Yang also recounts that cloud mining companies flocked to Sichuan in the wake of the devastation, “offering 50 yuan a unit” to miners for scrap rigs.
Sichuan Attracts Li Yang
Li Yang is a former Apple employee who moved to Sichuan from Chengdu in 2017, quickly opening a cryptocurrency mine next to a hydropower station in Aba, Sichuan. Li Yang was attracted to the simplicity of the business model underpinning mining, stating “This business is very simple. Many people want to mine, but the cost of operation of a single mining pool is too high. Customers pay for the mining machine and then host it. We use the APP to check the status of the mining machine at any time.”
The entrepreneur had calculated that each small crypto mine hosting 1,000 rigs should be able to generate 1 million yuan (approximately $150,000) in profits each year after expenses. At present, Li Yang owns 5 mines.
Sichuan as Global Hydropower Capital
According to Jeimian, Sichuan is home to the most abundant hydropower worldwide, with “20 hydropower stations [located] in the Lancang River Basin. During the peak of the wet season, the media outlet estimates that “the cost of electricity in Sichuan can be as low as 0.08 yuan” – less than one-third of the price of thermal power in the region.
An anonymous mine operator from Chengdu attested that “Electricity is directly pulled from the hydropower station,” adding that “The hydropower station over there has too much electricity, and it can’t be used.”
Sichuan is estimated to be home to approximately 600 medium and large sized cryptocurrency mines hosting more than 2,000 machines each.
Do you think that the devastation caused by the recent Sichuan floods will lead to more miners spreading their operations across multiple locations? Share your thoughts in the comments section below!
Images courtesy of Shutterstock
At Bitcoin.com there’s a bunch of free helpful services. For instance, have you seen our Tools page? You can even lookup the exchange rate for a transaction in the past. Or calculate the value of your current holdings. Or create a paper wallet. And much more.