The Chinese state-owned State Grid Sichuan Ganzi Prefecture Electric Power Co, Ltd. has responded to the widespread circulation of a document bearing the official stamp of the company that appeared to indicate an impending crackdown on bitcoin mining operations on the part of the power company.
Also Read: Chinese Hydroelectric Crackdown Could Herald the Demise of Cheap Bitcoin Mining
The Company Has Confirmed the Document’s Authenticity, However, Stated That It’s Meaning Has Been Misinterpreted
Although the company has confirmed that the document is indeed official, the company has described such as only constituting an internal memo – stating that the company does not possess the authority to determine the legality of bitcoin. According to a rough translation, the company told Chinese media outlet, Caixin:
”Our power sector is just a business unit, not a state agency, nor does it have the power to characterize whether the production of bitcoin is illegal or not, and there may have been a lot of ambiguity in the presentation of the document,” according to a rough translation.”
The leaked document attributed to the State Grid Sichuan Ganzi Prefecture Electric Power Co., Ltd. Danba County Power Branch stated that “bitcoin production is illegal business,” demanded that miners “stop bitcoin production,” and threatened that individuals conducting the illegal transfer of electricity from grid-connected power stations will be subject to “punishment”. The power company has sought to assure that the above statements have been taken out of context, claiming that the memo was intended to address specific “fail[ure]s” of “small hydropower stations” to “give priority to… the local… electricity demand,” according to Caixin.
The Province of Sichuan Is Home to Numerous Cryptocurrency Mining Operations
An official from the Danba County Branch told Caixin that the county has a limited power supply, stating that of the branch’s nine small hydropower stations, six are supplying power to bitcoin mines. With the local county entering the dry season of winter, Danba will be left with insufficient power. During winter, the official states that county branch limits electricity consumption during night hours in order assure that rural communities are supplied with ample power during the dry season.
An anonymous bitcoin miner has told Caixin that the average price of electricity in Danba County is 0.3 yuan ($0.05 USD) per kilowatt-hour (kWh). During winter, the price will increase to as high as 0.18 yuan/kWh, resulting in many miners partially relocating their operations to Inner Mongolia.
Caixin reports that the average costs required to mine a single bitcoin in China is less than $20,000 yuan ($3920 USD) – of which approximately 75% percent is comprised of electricity costs.
Do you accept the power company’s explanations regarding the recently circulated document? Share your thoughts in the comments section below!
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