- China announces electricity rate cuts in Sichuan and supports Bitcoin miners affected by the bear market in February and March.
- Between 600,000 and 800,000 have had to liquidate their positions since the end of 2019 due to low BTC prices.
Analyst Joseph Young reported on his Twitter account new measures from the Chinese government in support of the Bitcoin miners. In anticipation of the rainy season in Sichuan province, the government has decided to reduce electricity rates. Although Sichuan is known as one of Bitcoin’s mining capitals, the stagnation in BTC’s price and the volatility in the market have caused about 600,000 to 800,000 miners to liquidate their positions since 2019.
In addition, a recent report revealed that Southwest China has gone through a dry season. Therefore, areas such as Sichuan experienced shortages in their energy supply. During this period, the local government urged Bitcoin miners to reduce their activities.
Bitcoin halving coincides with rainy season in China
BTC prices have seen gains over the past few weeks, but remains below the price required to maintain miners’ operations in Sichuan. However, during the rainy season, hydroelectric plants are allowed to provide electricity to Bitcoin miners. The energy that these miners receive comes from the excess electricity produced that is not required to supply the local population and industry.
Red Li, source of the measures in favour of the Bitcoin miners cited by Young, said that the coming rainy season allowed the government to reduce the electricity tariff to CNY 0.20 or about 3 US cents per 50,000 KW. By comparison, Li said the 2019 rainy season brought rates down to CNY 0.28 around 4 cents. Young said:
This is optimistic for large bitcoin miners in China, especially in Sichuan.
After halving, if BTC remains in $6~$7k, F2Pool co-founder said there is real risk of more mining machines shutting down.
But, he also said cheaper electricity can protect miners, which is happening.
The illegalization of Bitcoin mining and trade in China was ruled out with the introduction of a new law. Known as the “Crypto Law,” it came into force on January 1 of this year. It aims to regulate all issues related to cryptocurrencies, blockchain technology and fintech. Although initially perceived as a positive signal in the market, China continued to tighten its measures against exchanges while preparing for the launch of its own digital currency, the digital Yuan currently in its testnet phase.