A recent turn of events to power production expectations in southwestern China has led to bold moves by Bitcoin miners to reignite mining efforts, despite Bitcoin’s current bear market.
The expectations for power production come from the region’s hydroelectric plants having access to more water than usual. With a plentiful supply of water, power production in the southwestern provinces of Yunnan and Sichuan is expected to soar. There will be an excess of power, and it will become much cheaper as a result. It is no secret that one of the largest contributors to failed mining attempts is the inability to overcome high energy costs, but it seems the situation may be getting easier for a lucky few.
Who are the lucky few?
Individuals and companies likely to take advantage of the excess power situation in Sichuan and Yunnan are many, but there are a few notable players.
Hashage, for example, is a Sichuan-based company with several mining farms and they seem very interested in the change of events. The company has stated that summer power costs from hydroelectricity will be nearly $0.037 per kWh, which is a far cry from the usual $0.052.
Hashage is currently in talks with both individuals and larger mining firms interested in hosting from a thousand to tens of thousands of mining units in the area. Judging from those numbers, it is clear that the relatively small reduction in power costs will result in huge benefits for miners.
In fact, if we were to assume that there was only a $0.0015 reduction in price, an operation exceeding 20,000 mining machines would enjoy an income increase at a minimum of $27,000 per month.
Anyone with access to mining equipment who can arrange hosting in the area affected by the impending power boom will clearly gain an upper hand in the mining industry.
ASICs in High Demand
Miners and their hosts aren’t the only ones set to benefit from the cheaper power production in southwestern China. It seems that anyone with a surplus of used ASICs, such as retired AntMiner S9s, is not perfectly positioned to sell of their stock.
The prices for these machines on the second-hand market is far lower than costs for new machines, making them a perfect solution for anyone looking to acquire a lot of them. Used AntMiner s9s, for example, are going for much less than half the original cost.
Where are all these AntMiner s9s coming from? According to the chief marketing director for the popular mining pool, Bixin, 2018 saw some of the industry’s largest mining operations shut down leaving the S9s that powered the operation sitting dormant. Anyone with a truckload of these ASICs is likely more than happy to unload their stock.
Success Dependant on Bitcoin Price
For those able to take advantage of the coming power surplus, profits seem inevitable. That is, of course, so long as the price of Bitcoin remains at a high enough level to turn a profit after energy expenditure.
The threshold to look out for is $3,000 per coin. That means when the price per kWh is set at $0.05, profits can still exceed 50 cents. Any lower than that, however, and the entire operation begins to look too risky, which is a situation that will likely lead to a mass pullout from the southeastern Chinese region.