China is cracking down on the power use by Bitcoin miners, meaning any cheap energy that was once available is now not there.
The trouble comes when you consider that the entire electricity system is oversupplied, which has led the producers of wind and solar power to cease the generation of electricity. This has been a huge problem that has been plaguing the country for years.
One third of wind generation and a quarter of solar energy in the North Western provinces of Xinjiang and Gansu was curtailed in the first half of 2017, and fossil fuel generated plants have remained out of use for years, causing utilisation rates to have barely broken in nearly four years.
But, despite this, Bitcoin has been a massive hit for generators; however, this comes at a huge price. the electricity that is needed to mine Bitcoin requires a huge amount of energy – close to the power that the whole of Estonia or Peru use. Naturally, this has meant that miners tend to go to the areas where the electricity is cheapest, which has been China in recent years.
This is about to change though, and The People’s Bank of China has recently released plans, which will limit the amount of power Bitcoin miners can use. However; this might be more difficult to implement than people first thought, and this is thanks to the way China’s energy system is changing. Beijing have introduced measures that prevent the building of surplus generation, and to transfer the electricity that is available to where it is needed the most, to reduce the amount of wastage.
All but one line is expected to shift electrons from the oversupplied areas in the north and west to the east this coming year. This is expected to have an impact on Bitcoin miners, as many have grown dependent on this cheap energy that was available to them; however, this will soon be coming to a harsh end.