The Chinese province of Sichuan, one of the main cryptocurrency mining areas in the country due to its abundant hydroelectric power, issued an order to suspend the supply of electricity to 26 local facilities dedicated to the extraction of bitcoin (BTC) on Friday (18th). ). The measure is in line with Beijing’s plan to reduce energy expenditure on the activity to meet its climate goals.
The order was recorded in a document issued by the provincial Energy Office in conjunction with the Sichuan Development and Reform Commission. The decision imposes that power generators and distributors in the region must suspend the supply of electricity to 26 important and well-known bitcoin mining sites.
The document is circulating on WeChat and has been reverberating in the local media. Government agencies have defined a two-step plan to curb mining activities in the region. The problem was identified during a meeting of China’s State Council last month, prompting Sichuan to act.
Both measures will have a direct impact on 26 large cryptocurrency mining facilities that have sought to work together with the government and have set up in specific industrial zones under a subsidized program, consuming energy from the public structure.
However, the entire plan is also expected to partially inhibit the activities of smaller miners, who consume electricity from private suppliers, even if the Chinese state is unable to close all these mining centers.
State program miners to be suspended
In its two-step plan, the first step taken by the Office of Energy and the Sichuan Development and Reform Commission requires state-owned power generators and distributors to cut off electricity from local hydropower plants to the 26 mining facilities in Sichuan. bitcoin listed. The order must be fulfilled by Sunday, June 20th.
The Sichuan Energy Office convened a meeting of all state energy supplying entities earlier this month. Its objective was to identify how many and which facilities were mining bitcoin as a main or partial activity while listed in a government incentive program for the use of hydroelectricity. The impacts that these miners were causing on energy consumption in the region and on the local economy were also evaluated.
The result was the listing of 26 facilities that were carrying out the activity while participating in the “Sichuan Hydroelectric Consumption Industrial Demonstration” program, implemented in areas that have government subsidies. These factory-oriented parks were created by local authorities in an attempt to attract electricity-intensive industries to the region that provides clean energy, reducing demand from coal plants in other provinces.
Furthermore, Sichuan, which is powered almost solely by hydroelectricity, ends up producing excess energy during rainy seasons. So bitcoin miners saw an opportunity to settle in the region while offering cheap electricity.
In agreements with the government, these miners went through a more meticulous application process and paid additional fees to Sichuan state entities. However, precisely because they were identified during this registration in the incentive program, they ended up becoming the first victims of the new plan of the Chinese authorities.
Sichuan wants to inhibit miners from the private network
There are still a significant number of bitcoin mining facilities that have not been identified by the Sichuan regional government and that consume energy from the private grid. The “direct supply model” is a common practice in agreements between miners and power plants, in which the generator enters into a contract to power the cryptocurrency extraction machines directly, bypassing the state grid as an intermediary. This makes it more difficult for the government to identify the miners.
That said, part of the plan of Sichuan state agencies is to try to solve this problem. The second measure implemented by the order issued today is that all state entities participating in the electricity supply process must report possible bitcoin mining centers that work with private providers.
In addition, agencies must expand their inspection capacity in the public grid and immediately cut off the power supply if a facility is identified to be mining the cryptocurrency. The results of this step must be presented by June 25 for further evaluation.
Part of the reason the Sichuan government created the hydropower consumption incentive park was to fight these private power deals between smaller plants and bitcoin mining sites. This new onslaught by the Chinese government against cryptocurrency miners is expected to impact the global hash rate, but no significant changes have been seen as of the time of this publication.
With information: The Block