China Crypto Mining Ban Yields Hydroelectric Power Plant Glut
Following China’s crypto mining ban, many of companies and individuals who own small hydropower plants in China have put their facilities up for sale. According to Coinfox, the facilities are even available online. Because the ban on bitcoin mining came so quickly for the Chinese, owners of the plants wanted to make sure that they could reclaim as much of their investments in the assets as possible while there is still a demand for inexpensive electricity.
The majority of the advertisements for these sales are on the e-commerce site, Xianyu. Most of the hydropower plants are located within the Sichuan province in southwestern China, an area that had recently been known as the hub for bitcoin mining due to its rich water sources. The capacity for these small plants is about 50 megawatts. At least 26 mining farms stopped working in the area within the past weeks.
Those selling the plants note that there are mining farms connected to the plants, and that if one is stealthy enough, they can secretly mine cryptocurrency despite the ban, in the area.
Other sellers stated that due to China’s crypto mining ban the demand for the energy produced by the plants sharply decreased, leading to the sale of the facilities. Due to the saturation of facilities available in the region, the plants themselves have depreciated in price.
Small hydropower plants such as those available in the Sichuan province are common in provinces that are water-rich, and many local governments support such facilities. They help to electrify remote rural areas. For instance, in the Yangtze River Economic Belt, spanning 9 Chinese provinces, there are over 25,000 small hydropower plants with a capacity less than 50 megawatts.
Does this spell trouble for bitcoin investing in particular and cryptocurrency in general?
As more countries move to place restrictions on cryptocurrency trading – Turkey, for example – it may seem as though the cryptocurrency boom is coming to a sudden end. This coupled with the recent drops in bitcoin’s value can be concerning. However, it may just be a push for greener methods of cryptocurrency mining and for finding more sustainable means for energy production moving forward.
John Wu, Ava Labs President, doesn’t believe that the end of Bitcoin is anywhere near and he doesn’t believe that these crackdowns are cause for alarm. In a recent interview, he said, “…first of all, China cracking down on Bitcoin, cryptocurrencies is actually nothing new.” In fact, in 2017 China came out against exchanges and in 2019 they began banning miners. He believes that while crypto is down at the moment, it will go back up. Moreover, Wu says, “…there are great new companies in Texas who are going to take up the slack here. There is great solar as well as wind power that is very cheap and renewable.”
Wu also points out that interest in cryptocurrency is growing despite the fact that prices are down. So while all of the bans and the volatility seem concerning in the short run, in the long run, the prices should start to pick back up – and hopefully – remain more stable.