2016-09-08

Chinese Villages Mine Bitcoin

A remote village in Sichuan is able to make money on Bitcoin thanks to malinvestment in power generation.

Virtual Gold: Why Beijing is Leading China's Bitcoin Revolution
Industry in Moyu has also been slow. A hydropower plant was built years ago nearby the waterfalls that crash down from the steppe. The plant’s engineers had hoped to sell their hydropower to the national grid, but demand wasn’t as high as they’d projected. The plant made barely enough money to pay staff wages.

So when Mu’s employer, HaoBTC, pitched the idea of building a bitcoin ‘mine’ that would run on the town’s ultra-cheap hydroelectric power, local reception was positive. It didn’t matter that the managers at the plant had no clue what bitcoin was. It was bringing money, and it was bringing jobs. Local government officials were pleased.

...This is where China excels – it’s a tech-savvy country with access to cheap power. (“Mining is big in China because the costs are very competitive compared with the rest of the world,” explains Mu.)

Sharma’s employer, Bitmain, also runs mines across the world – in Canada, Iceland and China. Sharma says his company originally invested in places where coal was cheap – primarily Shanxi and Inner Mongolia – but later shifted to hydropower in the Western mountains like HaoBTC did.

But in Beijing, where the company’s offices are based, it sells the most advanced bitcoin mining computers on the planet. “Nothing in the world has that kind of computational power,” says Sharma.
This story turned out well (assuming the debt is being repaid and not rolled over) thanks to luck and the fact that electricity prices can fall. If China had a policy of propping up electricity prices to keep power companies in business, Moyu would still have an idle power plant.

H/T: Sinocism Newsletter.

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