The local government issued a document supporting Fengshui mining. First time since 2018: Sichuan may open up on a large scale
Editor's note: The original title was “EXCLUSIVE: Local Government Documents Supporting Fengshui Mining for the First Time in 18 Years or Large-scale Opening”
Wu said blockchain learned that the Sichuan Ya'an Municipal People's Government has recently officially issued the “Implementation Opinions on Building a Hydropower Consumption Demonstration Zone to Support the Development of the Blockchain Industry”. Sources pointed out that this may be the first time in 18 years that a local government has clearly issued a document to support mining during the flood season, which is very rare. There is also news that more regions in Sichuan may open up one after another.
This implementation opinion document states that it is necessary to give full play to the advantages of our city's hydropower resources, seize major strategic opportunities for the development of the blockchain industry, promote the healthy and orderly development of blockchain technology and industry, promote high-quality consumption of hydropower resources, and cultivate new growth points for our city's economic development.
The document also stated that it will give full play to the decisive role of the market in resource allocation, form a win-win pattern of full consumption of water and electricity and healthy and orderly development of the blockchain industry, and build Ya'an into an influential blockchain industry cluster in the country.
According to the document, leading blockchain companies should be actively introduced to determine users' electricity prices according to the “transaction price plus transmission and distribution price+government funds and surcharges” method. However, electricity companies are also required to invest at least 5 million yuan; have IDC qualifications, engage in blockchain research and development and related technological innovation activities, have corresponding relevant qualifications or certificates, and sign formal “power supply contracts” and “grid-connected scheduling agreements” with power supply companies.
70% of the world's cryptocurrency mines are in China, and 70% of China's mines are in Sichuan. Southwestern Sichuan, including Ya'an, and the Dadu River basin gather most of the world's computing power. With the advent of the abundant water season, electricity prices may be less than 0.2 yuan.
In August 2019, the General Office of the Sichuan Provincial Government issued the “Implementation Plan for the Construction of the Sichuan Hydropower Consumption Industry Demonstration Zone”, which decided to launch pilot hydropower consumption industry demonstration zones in 6 cities and states, including Ganzi, Panzhihua, Ya'an, Leshan, Liangshan, and Aba. These regions are remote and have poor transportation. Heavy industries that use a lot of electricity are almost impossible to invest locally; the only ones that actually use electricity are mining companies.
The “Implementation Plan” provides two electricity price accounting methods for electricity companies to independently choose. One method is a comprehensive electricity price for the whole year. The transaction price is determined by agreement between the electricity consumer company and the power generation company according to a level not higher than 0.22 yuan per kilowatt-hour, and the transmission and distribution price is implemented at 0.105 yuan per kilowatt-hour according to the single system. The other is to calculate the electricity price based on the amount of waste water and electricity. The price of electricity used by waste water and electricity indicates how electricity prices are formed when electricity companies use only waste water and electricity in May-October.
However, miners have mixed reactions to local support policies in Sichuan.
Some miners believe that it is a good thing that the industry is recognized by the government and is moving towards compliance, so that miners can reduce their concerns about policy changes. However, some miners believe that after the document is issued, they will not be allowed to use electricity without permission from power generation companies, and that government funds will also be increased, and mine costs will increase. In particular, as soon as Bitcoin output was cut in half, the mine's yield was likely to be cut in half. Many previous generation mining machines were shut down and unable to accept the increased costs brought about by compliance.
Wu said that another Ya'an Baoxing County document obtained by blockchain also emphasizes the need to “focus on cracking down on illegal acts such as unauthorized transfer of electricity supply to the outside world by some power generation companies, disrupting the order of electricity supply and use, and endangering the safety of power grids, so as to ensure normal power supply order.”
Regarding mining/mining sites, the only statement made by the Chinese government was that on January 2, 2018, the Internet Financial Risk Special Control Office Working Leading Group (Mutual Fund Control Office for short) issued internal documents requiring all regions to guide enterprises under their jurisdiction to withdraw from the “mining” business in an orderly manner and report the progress of the work regularly. The document indicates that the mining industry wastes resources and fuels virtual currency speculation.
In the 2019 NDRC Industrial Structure Adjustment Guidance Catalogue, cryptocurrency mining was listed as an eliminated industry, but the text published on November 6 also removed this entry, showing that after lobbying from various sectors, regulators at the economic and people's livelihood levels left room for mining.
With regard to the mining industry, the central government, and financial regulators in particular, have a negative attitude. However, in terms of the actual situation in the region, there are currently energy surpluses in poor regions such as southwest China and northwest China, and the debt crisis in counties and cities is serious. The mining industry is a financial resource that local governments, industries, and people are unwilling to abandon. Therefore, local governments often choose either explicit or implicit support. This is also the background of Ya'an's rare publication of documents to support mining during the flood season.
Source: Wu talks about blockchain
