Flooding in Sichuan Province Reveals Hidden World of China’s Modest-Time Bitcoin Miners
A particular report on the current floods across China’s Sichuan province has uncovered an extraordinary story of resilience, discomfort, tragedy, and quickly changing financial situations seasoned by the the people who make up the planet’s largest concentration of little-time bitcoin miners.
Put collectively by Chinese news platform Jiemian, the report follows the story of Li Yang, the owner of a reasonably tiny bitcoin mining farm in an area dotted by hundreds of comparable-sized bitcoin mining operations.
Sichuan’s 5 Million Bitcoin Mining Rig Army
As earlier reported on CCN, severe floods in the Sichuan area took out a substantial amount of the bitcoin network’s hash price, following devastating a big amount of mining gear housed in several makeshift “farms” in the mountainous area.
According to the Chinese report, the Sichuan mountains are property to more than five million mining rigs. It has been estimated that up to 70 % of the bitcoin network’s hash rate originates from China, and of this capacity, as much as 70 % is primarily based in Sichuan.
For the first time, an insight is provided into the lives of an estimated 25,000 people who reside lonely, secluded lives in the mountains, surrounded by thousands of ASIC mining rigs. Li Yang is a single of these individuals, attracted to the isolated region because of its low electrical energy expense, courtesy of twenty nearby hydropower installations along the Lancang River basin.
Li describes a somewhat dystopic existence with no human contact, surrounded only by birdsong and the mechanical roar of mining gear, with only WeChat and games for company.
“Do you know what I am most afraid of? It is power outage and loneliness.”
In instances of high water, electrical energy charges as little as 0.08 yuan/kWh — three instances less than the Chinese national typical. Numerous enterprising men and women set up mining farms here in partnership with investors who contribute toward the cost of gear in exchange for a share of earnings.
In June, however, life changed dramatically for a lot of Sichuan’s “mining army” as floods ransacked the region, destroying tens of thousands of mining rigs and sending numerous thousand bitcoin miners into an unprecedented struggle for survival.
The flooding expense Li ten million yuan (~$1.5 million) in equipment and lost revenue. According to him, a couple of enterprising cloud computing firms saw an chance to develop their infrastructure cheaply soon after the flooding. In the aftermath of the floods, they flocked to the Sichuan mountains to buy scrap mining equipment at 50 yuan (~$7.40) per unit.
The total number of mining rigs lost is estimated at 20,000, with financial losses totaling one hundred million yuan (~$15 million).
According to the report, even prior to the floods, this mining model was on its last legs, threatened by the entry of mining “whales” into the business, threadbare profit margins, and excess computing energy, top to reduced block rewards for little-time mining farm operators. Huge firms are also launching their personal managed machine mining solutions, which smaller sized players can not compete with.
The floods have offered additional incentive to move away, and a big quantity of miners have decided to move their operations from Sichuan to Xianjiang in search of far better operating environment.
The move is described as “the biggest computing power migration in history.”
According to Li, the last available space for modest scale miners like him is getting taken away, and he is prepared to withdraw his investors’ money and exit the bitcoin mining sector. In his words:
“It is truly not possible to do it. Every month, the custodian will pay the electrical energy fee of 500 yuan per month to a mine owner in advance, and the mine owner will run the electricity bills.”
Eventually, the report concludes, bitcoin mining is becoming an increasingly centralised and corporate-dominated activity. While it may be also quickly to declare the finish of Sichuan’s  25,000-powerful mining army, it seems as if the future of bitcoin mining holds no space for miners like Li.
The full Jiemian report can be observed here.
Pictures from Shutterstock
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Published at Thu, 19 Jul 2018 01:05:17 +0000