Nov 14, 2017 04:01 PM

Electric Company in Sichuan Denies Ban on Bitcoin Mining

A bitcoin mine site near Kongyu county, Sichuan province. Photo: Visual China.
A bitcoin mine site near Kongyu county, Sichuan province. Photo: Visual China.

A document issued by a state-owned local electric company sparked concern in the bitcoin industry that China is moving to expand a crackdown on cryptocurrencies. But a company executive said the statement was misworded.

Titled “An Emergency Notice on Banning Bitcoin Production,” the document states that "bitcoin mining is an illegal activity" and says power generators in southwest China’s Sichuan province should stop providing electricity for bitcoin mining or face punishment for “illegal operations.”

The statement was circulated online Tuesday and quickly fueled speculation that Chinese authorities were considering a ban on bitcoin mining following earlier crackdowns on initial coin offerings and a ban on exchanging cryptocurrencies for legal tender. Bitcoin mining, an infrastructure currency-security activity that also generates new bitcoins, consumes vast amounts of computing power and electricity.

The Danba county branch of the State Grid’s Sichuan electric utility published the document, according to an executive at the power company who asked not to be identified. However, the executive said, some of the phrases in the document were inaccurately worded. The document was intended as an internal memo rather than a formal statement of policy, and it was drafted to urge local power generators to prioritize supplying electricity for civil use, the executive said.

“We are a company, rather than an administrative entity that has the power to determine whether bitcoin mining is legitimate or not," the executive said.

The notice was intended for small generators in the region that have violated agreements with the State Grid to prioritize power supplies for local residents before businesses, the executive said. Among the nine small hydropower generators connected with the company’s network, six have been powering bitcoin mining facilities. As water supplies runs low in winter, the county has suffered a power shortage, the executive said.

“There are many complaints from local people, and the notice was drafted in a rush,” he said.

China, especially its vast region in the west covering Sichuan, Inner Mongolia and Tibet, has been a powerhouse of bitcoin mining because of a supply of cheap wind power and hydroelectricity. A recent study published by the Dutch Bank ING found that a single bitcoin transaction consumes as much electricity as a house in a month.

According to a bitcoin mine operator in Danba, the cost to mine one bitcoin in China totals around 20,000 yuan ($3,014), including 15,000 yuan for the cost of power. The value of one Bitcoin stood at more than $6,520 Tuesday, according to data from CoinDesk, a news site covering digital currencies.

Chinese regulators told Caixin that the country has no plan to ban bitcoin mining. But as China tightens oversight of cryptocurrency trading, a number of mining operators have considered moving to Russia, Japan or Mongolia, Caixin learned from industry sources.

The Danba bitcoin mine owner told Caixin that his company has submitted an application to Russian authorities for a mining operation in the country, where power costs are even lower than in Danba.

Contact reporter Han Wei (

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