A Chinese city in the world's bitcoin mining hub is publicly encouraging the blockchain industry to help consume excess hydropower before the summer rainy season.
A guide for blockchain businesses
Ya'an, one of many cities in the mountainous Chinese province of Sichuan, a region that is estimated to represent more than 50% of the computing power of the Bitcoin network, recently published a public guide - probably the first - to seize "the opportunity strategy of the blockchain sector "so that they can help use the area's excess hydroelectricity.
Although not specifically mentioned in the guide, bitcoin mining is an activity in the blockchain sector that stands out for its dependence on the intensive use of electricity.
According to a report from a local newspaper on April 20, the government seeks to make the city a high-quality example of excess hydropower consumption and to become an "impact blockchain industrial hub" in the country.
The city guide of Ya'an also pointed out that the electricity that should be used by blockchain companies should come from that energy which is connected to the state grid. "In principle, blockchain companies should build factories near power plants that have excess power and are integrated with the state grid," says the guide.
"For blockchain companies that use electricity generated privately from power plants [without integration with the state grid] it should be rectified in due course." The warning also follows the change in the Chinese central government's attitude towards bitcoin mining activities last year.
A huge waste of electricity
The Chinese National Commission for Development and Reforms, one of the 26 ministries that make up the Council of State, initially labeled bitcoin mining as an industry that is expected to be removed from the guidelines in April last year.
However, the commission eliminated that plan in the final form of the guidelines in November. In general, the Chinese region of Sichuan has the problem of excessive hydroelectric energy which is wasted every year during the summer rainy season.
The government of the prefecture of Garze, for example, another mountainous area of Sichuan, said that hydroelectric plants in the area generated 41,5 billion kWh of electricity in 2017 alone, with a total excess of 16,3 billion kWh that went to waste.
As such, the spring and summer seasons are usually a positive time of year for bitcoin mining activities in China because there is always abundant and cheap electricity thanks to this excess of hydroelectric power.
At the moment, fluctuations and falling bitcoin prices due to the pandemic and the network's halving event expected in two weeks have cooled the expansion of bitcoin miners in the region.
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