Cryptocurrency Miners In Sichuan, China, Are Responsible For 54% Of Bitcoin Hash Rate

12/12/2019

With the internet connecting networks with networks, resources can be scattered around the world without boundaries. The same applies to cryptocurrencies.

According to the digital asset firm CoinShares that started tracking Bitcoin's hash rate since 2017, reported that miners in China controls 54% of the Bitcoin's global hash rate (processing power), with more than half of it controlled by a single province.

And that province is Sichuan.

The data by CoinShares suggests that the figure has increased quite remarkably since June, marking the highest recorded by CoinShares.

"Out of the remaining 35 percent of [global] miners, we estimate that 31 percent of global [hash rate] production is evenly split between Washington, New York, British Columbia, Alberta, Quebec, Newfoundland and Labrador, Iceland, Norway, Sweden, the Siberian Federal District of Russia, Kazakhstan, Georgia and Iran."
Bitcoin mining in Sichuan, China
A person standing near racks of miners in a Bitcoin mining site near Kongyu county, Sichuan province. (Credit: Visual China)

People in the cryptocurrency business and enthusiasts know that mining digital coins require huge amount of resources.

This is why according to CoinShares, most of the miners in China get their electricity - which almost hit $5.4 billion in 2019 - from renewable energy. To be exact, CoinShares estimated that 73% of the electricity used by the world’s Bitcoin miners is renewable.

"Overall, our findings reaffirm our view that Bitcoin mining is acting as a global electricity buyer of last resort and therefore tends to cluster around comparatively under-utilised renewables infrastructure."

"This could help turn loss making renewables projects profitable and in time — as the industry matures and settles as permanent in the public eye - could act as a driver of new renewables developments in locations that were previously uneconomical."

And Sichuan in particular, also has cheap electricity price.

The yearly production of hydro-energy in Sichuan far outweighs export demand, leaving the province with an abundance of cheap electricity

Sichuan Bitcoin mining

Sichuan occupies 485,000 km2 of land, and is a landlocked province in Southwest China, between the Himalayas and the Yungui plateau.

The province is known as the home of the ancient states of Ba and Shu, and has a long history that can be traced back to many centuries.

Back in October 2019, as reported by the Chinese language daily newspaper Sichuan Daily, the Sichuan Decision-Making Consulting Committee, a government-backed organization, hosted a meeting to discuss topics around the province’s future high-quality developments.

And this included cryptocurrencies.

During the meeting, Yang Jiang, a former vice chairman of the China Securities Regulatory Commission, said the combination of Bitcoin, blockchain and excessive hydro-energy in Sichuan should create more business opportunities in the region.

Yang Jiang
Jiang Yang at the Asian Financial Forum in Hong Kong. (Credit: Reuters)

The comment came amid local authorities’ probe into Bitcoin mining sites in Sichuan that are allegedly built without appropriate procedure.

Yang added at the time, that 70% of all Bitcoin got mined in Sichuan, although Yang didn’t explain the source of the data,.

"Blockchain can be involved in every industry. Its main application in the financial sector is digital currency with bitcoin as a key example," Yang was quoted as telling the committee members, adding that Bitcoin mining requires cooling and computing, making it an energy-intense industry.

And for that reason, Yang suggested that Sichuan should dedicate efforts to further study how Sichuan’s plentiful hydro-energy can maintain its attractiveness to digital currency-related industries in an aim to explore new economic opportunity and growth force.

Over the year, Bitcoin‘s hash rate has climbed drastically, regularly breaking all-time-high records. CoinShares noted this is likely caused by the introduction of more powerful mining chips released by Chinese firms, such as Bitmain.