Bitcoin miners in China are again faced with yet another challenge. In a recent tweet by Colin Wu of Wu Blockchain, Chinese authorities ordered electricity suppliers to cease from supplying power to Bitcoin miners in the region effective on Nov. 30. Yunnan is the fourth-largest mining place in the world next to Sichuan, Xinjiang, and Inner Mongolia.
But Wu also added in her tweet that the recent move by the authorities could be more demand for economic interests than political pressure.
In another report on June 1, the local government of the Dehong Dai and Jingpo Autonomous Prefecture have implemented a cleanup in the bitcoin mining sector in the region. A total of 64 bitcoin facilities were shut down. The initiative was mainly due to the security risks of pulling wires directly from hydropower stations and severe tax evasion related to mining services.
On May 29, an explosion occurred in a hydropower plant in southwest China’s Yunnan killing 6 people in the process and leaving 5 others injured.
65% of the BTC global hash rate is from China with Yunnan contributing to 5.42% of the total hash rate from the country. What makes China the most conducive country for bitcoin miners? China is the manufacturer of most of the mining equipment and also a location for massive mining farms due to cheap electricity prices. Electricity is either supplied by hydro-electric facilities or subsidized by the government.
China Bitcoin Miners Major Setbacks
But bitcoin miners in the country have faced other drawbacks in the past months. Last June, Chinese authorities launched a crackdown on over-the-counter (OTC) brokers in the country. They have blocked accounts to stop illegal activities like money laundering carried out through cryptocurrency deals. This has made it difficult for the miners to convert their bitcoin to yuan. According to Thomas Heller, chief operating officer of mining and media firm HASHR8, “many people have had their bank accounts frozen when exchanging crypto for [renminbi] on OTC platforms.” As a result, bitcoin miners have been struggling to pay for electricity.
The rainy season has also brought devastating monsoon rains that resulted in heavy flooding which has affected bitcoin miners in the country.
With the current move by the Chinese authorities, bitcoin miners in the region are experiencing another setback.
The recent bitcoin price surge and massive adoption resulted in an increased demand for the cryptocurrency. On Oct. 18, Bitcoin’s hash rate hit an all-time high of over 162,200,000 Tera hashes per second. Hash rate is an interesting metric to follow for investors since it shows that miners are investing in and deploying new equipment. And this is in anticipation of a possible Bitcoin (BTC) price hike.
But with the continuous crackdown of the Chinese government on bitcoin miners in the country, will this significantly affect the price of bitcoin? Will it thwart the ongoing bull run of the cryptocurrency? With China as the world’s largest bitcoin hash rate contributor, the ongoing issue is not something that should be taken lightly.