Bitcoin has proliferated in China so much that 70% of the world’s bitcoin computational power is concentrated here. Many bitcoin mining operations have even sprung up in power stations deep in rural Sichuan hillsides, an unexpected place to be associated with a blockchain-based digital currency.

As Bitcoin Mining explains, “mining” is a way to reward those who contribute computational power to the Bitcoin network by converting electricity. Miners are rewarded by bitcoins or the transaction fees included in the transactions validated when mining bitcoins. It can be easy to start mining for bitcoins: the required computer hardware and software are readily available. What is hard to do, however, is to mine bitcoins profitably.

Locations with cheap power will have a definite advantage. At Sichuan’s Leshan city, where many large scale bitcoin mines are based, the rate for commercial use electricity during the wet season is around RMB 0.5 per kilowatt. This is less than half of the rate in metropolitan centers, such as Beijing where commercial power costs around RMB 1.28 per kilowatt.

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Linda Lew

Linda Lew is a Beijing-based journalist who covers technology, start-ups and business in China. You can reach her at lindalew at aliyun dot com.