The behavior of market participants in cryptocurrencies usually depends on political and economic factors: the price of crypto assets, regulations or political events in certain countries. For Chinese miners, however, the factors are different. China’s mining has been heavily dependent on the climate for several years. Although western crypto companies are concerned about falling stock prices and regulators, the survival of many cryptocurrency mining companies in China still depends on the rain.
Chinese miners recently moved north from the southern region, where electricity prices may be as low as $ 0.01. This migration increased Bitcoin’s hash rate (BTC) by more than 40% in two days. Despite annual migration, the rainy season closure may not be the only factor this year.
“Migration of Great Miners”
The migration of Chinese miners is a common practice and is mainly influenced by the climate that determines the cost of electricity. Eddie Jiang, chief operating officer and partner of VIA PTC Mining Group, told Cointelegraph that the southern provinces of China experienced heavy rains from April through October, resulting in excessive hydropower and cheap electricity prices.
Dejun Kenny Ge, founder of Zhongda Jinfu Finance and co-founder of Shanghai investment platform Dd.finance, can save miners about $ 0.18 per kilowatt (12 yuan per kilowatt) moving from northern China to southwest China. When the rainy season ended in the southern region in late October, the price of electricity rose to around $ 0.054 / kWh. Currently, miners are transferring drilling rigs to facilities in the northwest such as Xinjiang, Inner Mongolia and Qinghai, where utility bills are typically around $ 0.05 / kWh.
The lower temperature in the northern region is another factor that prompted the transportation of Chinese miners from the south. Alejandro de la Torre, Vice President of Poolin’s Poolin Cryptocurrency Mining Pool, described the process as “mass migration of miners” and stated, “The weather in northern China is cold so mines don’t need to cool the mining platforms.”
However, not all miners follow this principle. Hoping to remain anonymous, a local miner spoke to Cointelegraph about the matter. He said that although China has two mining centers – one in Sichuan (southwest) and the other in Inner Mongolia (north), Chinese miners rely more on the south. Ability. He also noted that many miners in Sichuan are now choosing to stay in place rather than migrate north: “Our mining capacity in Inner Mongolia is currently only generating 20% -30% of our total hash rate. ”
Isn’t it the weather this time?
Taras Kollek, senior vice president of blockchain business development at North American digital asset mining infrastructure provider Core Scientific, announced that Chinese miners have recognized that large-scale unit migration at any time of year is not the most sustainable model.
Some sources said the migration of Chinese miners this year was due not only to climate change, but also to the country’s stricter regulations and government pressure on crypto companies. Previously there were reports that the co-founder of OKEx had been arrested by Chinese police. Mr. Ge from Zhongda Jinfu Finance Co., Ltd. pointed out that the strictest recent regulations have hit China’s mining industry operators the hardest:
“Due to stricter regulations, many mining facilities that operate under the national grid in Inner Mongolia have been closed. In the provinces of Sichuan and Yunnan, too, many mining facilities that benefit from the direct energy supply from power plants have been closed. ”
Since 2017, the Chinese government has increased the number of inspections of crypto farms, many of which have been closed. As Jiang Zemin pointed out, every year local governments check the power consumption of mines. “For mines that use incompatible electricity, the regulator will require corrections to meet the requirements.” Then he added, “This year some local governments have created compatible consumer power and mining companies can apply to mine. I think this is surveillance. Further progress has been made in policy. “