Local state authorities of the Western Chinese province of Sichuan have reportedly started an investigation into suspected illegally setup Bitcoin mining farms along the banks of Dadu river where it is extremely cheap to run Bitcoin mining operations due to cheap electricity from hydroelectric power stations on sight. A report by state-owned media agency Sina made the announcement on Thursday, May 30th. The Sichuan province of China is mountainous and full of water resources. The region in question is called Garze, a county in the Sichuan province through which the Dadu River flows.
The article identified one power station built along the river – Ginkang hydroelectric power station – in which one Bitcoin mining farm without the proper legal documentation has been established. The illegal Bitcoin miner has a capacity of about 50,000 machines of which 60% of that is already in operation. “We are still investigating on the issue and can’t disclose more details on the overall situation,” an official from China’s Economic and Information Bureau was quoted as saying.
Another official from the local land resource bureau who also spoke to Sina said that the permit to operate in the region is necessary to ensure that no one establishes an illegal business to take advantage of the cheap electricity.
“If [a bitcoin mining farm] is built within the authorized area of a power station for electricity consumption, we need to verify if their usage is legal. If it’s outside the authorized area, then it needs to be dealt with as the construction was not approved.”
China is approaching the mid-year rainy season which has coincidentally aligned with the return of the Bitcoin bull season. Most Bitcoin miners in the global Bitcoin network are based in China and most of these were shut down during the ‘crypto winter’ season towards the end of the year last year. It is safe to assume that most of these defunct miners will be looking to reestablish their operations and this will be most probably in the cheaper-to-run regions of western parts of China especially in the Sichuan province. The report by Sina seems to confirm this and shows that Bitcoin miners in China are either expanding their operations or setting up new mining farms to take advantage of the upcoming cryptocurrency bull season.
“We don’t allow outside investment in the area to be involved in bitcoin. Even for big data projects, we will conduct an investigation into the nature of the data involved before making a decision,” an official from the Economic and Information Bureau told the newspaper.