In a significant development for the blockchain and cryptocurrency mining industry, multiple Bitcoin mining operations have been officially included in Sichuan’s first batch of “Hydropower Consumption Demonstration Enterprises.” The announcement, released on April 21 via the Sichuan Electric Power Trading Center’s official platform, lists 99 enterprises across six pilot zones—marking a strategic move to harness surplus hydropower and support high-energy-consuming digital industries.
Among the listed companies are several blockchain data centers and tech firms associated with cryptocurrency mining, such as Xiaojin County Kedi Big Data Storage Technology Co., Ltd., Heishui Kedi Technology Co., Ltd., Barkam Kedi Technology Co., Ltd., Kangding Zhitong Hulian Technology Co., Ltd., and Chengdu Wuji Chain Technology Co., Ltd. (Kangding Branch). These inclusions signal growing governmental recognition of blockchain infrastructure as a legitimate industrial consumer of renewable energy.
This initiative is part of a broader effort by Sichuan Province to address long-standing challenges related to hydropower overproduction during the wet season—commonly known as the “water-rich period” or fengshuiqi—when massive volumes of electricity go unused due to insufficient local demand and transmission bottlenecks.
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The Rise of Hydropower Consumption Zones
The foundation for these demonstration zones was laid in August 2018 with the release of The Implementation Opinions on Deepening Sichuan's Power System Reform (Document No. 26 [2018] of Sichuan Provincial Government). This policy identified key structural issues in the province’s power sector: underutilized price advantages of hydropower, lack of competitive market mechanisms, high grid construction costs, and significant curtailment of hydroelectric output during peak generation months.
To tackle this, the document proposed establishing industrial demonstration zones near hydropower-rich areas where excess electricity could be consumed locally. A year later, in July 2019, the Sichuan Hydropower Consumption Industrial Demonstration Zone Construction Plan was jointly issued by the Provincial Development and Reform Commission, Department of Economy and Information Technology, Sichuan Energy Regulatory Office, Provincial Energy Bureau, and State Grid Sichuan Electric Power Company.
This comprehensive framework outlines six core components: overall objectives, pilot regions, industrial layout, pricing policies, trading and settlement mechanisms, and implementation requirements. It officially designated six pilot zones: Garzê Prefecture, Panzhihua City, Ya’an City, Leshan City, Liangshan Prefecture, and Ngawa Prefecture—all regions with abundant hydropower resources but limited local load capacity.
The program runs from August 1, 2019, to December 31, 2022, after which it will be evaluated based on progress in power market reforms, supply-demand dynamics, and utilization rates of surplus hydropower.
Strategic Support for Blockchain and Data-Intensive Industries
While the policy allows various energy-intensive industries to participate, blockchain and cryptocurrency mining have emerged as particularly strategic beneficiaries. Both Garzê and Ya’an have publicly emphasized the role of blockchain enterprises in advancing their hydropower consumption goals.
Ya’an’s April 2020 policy document—Implementation Opinions on Building a Hydropower Consumption Demonstration Zone to Support Blockchain Industry Development—sparked widespread attention within the mining community. It explicitly encourages the development of blockchain-related infrastructure by offering favorable electricity rates during the water-rich season.
Industry insiders note that this may be the first time since 2018 that a Chinese local government has issued formal support for cryptocurrency mining during peak hydropower periods. For miners, this translates into lower operational costs and greater regulatory clarity—two critical factors influencing investment decisions.
As one mining executive stated: “Right now, our top priority is relocating equipment to water-rich regions like Sichuan. The cost savings during the rainy season are too significant to ignore.”
Sichuan has long been dubbed China’s “mining capital,” thanks to its vast network of small and medium-sized hydropower plants. According to a December report by CoinShares, Chinese miners control 66% of global Bitcoin hash rate—with Sichuan alone contributing an estimated 54% during the wet season.
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Environmental and Economic Synergy
What makes this model compelling is its alignment of economic development with environmental sustainability. By channeling surplus hydropower—otherwise wasted—into productive use through data centers and mining farms, Sichuan is turning a challenge into an opportunity.
Cryptocurrency mining, often criticized for its energy consumption, becomes more sustainable when powered by clean, renewable sources. In this context, Bitcoin mining acts not just as an economic activity but as a flexible load balancer that helps stabilize regional power grids during periods of oversupply.
Moreover, the policy supports industrial upgrading by attracting tech-driven enterprises rather than traditional heavy industries. Local governments benefit from job creation, infrastructure investment, and increased tax revenue—all while promoting green energy utilization.
Frequently Asked Questions (FAQ)
Q: What is a hydropower consumption demonstration enterprise?
A: It refers to businesses approved to operate within designated zones where they can access discounted electricity generated from surplus hydropower. These enterprises help reduce energy waste by consuming excess power during high-output seasons.
Q: Why is Sichuan ideal for Bitcoin mining?
A: Sichuan has abundant hydropower resources, especially during the rainy season (May–October). The low-cost, renewable electricity makes it one of the most cost-effective locations globally for energy-intensive operations like cryptocurrency mining.
Q: Is cryptocurrency mining legal in China?
A: While financial transactions involving cryptocurrencies are restricted, mining itself has existed in a regulatory gray area. Operations using renewable energy in designated industrial zones have often been tolerated or even encouraged at the local level for economic and energy efficiency reasons.
Q: How does this affect global Bitcoin mining?
A: Since Sichuan contributes significantly to global hash rate during the wet season, policies supporting stable and affordable power supply directly influence network decentralization and mining profitability worldwide.
Q: Are these demonstration zone benefits permanent?
A: The current plan is set to expire at the end of 2022. Future extensions will depend on evaluations of energy market reforms, grid stability, and continued surplus generation.
Q: Can foreign companies participate in these zones?
A: While the policy does not explicitly bar foreign involvement, most participating firms are domestically registered. Entry would require compliance with local regulations and partnerships with approved entities.
Looking Ahead: Sustainability Meets Digital Innovation
The inclusion of blockchain firms in Sichuan’s official energy strategy reflects a maturing perspective on digital asset infrastructure. Rather than viewing mining solely through a speculative lens, policymakers are beginning to recognize its potential as a tool for grid optimization and rural economic development.
As global interest grows in sustainable blockchain practices, Sichuan’s model offers a real-world example of how renewable energy can power decentralized networks efficiently and responsibly.
With the 2025 water-rich season approaching, anticipation is building among miners preparing for seasonal migration. The success of this pilot could influence similar initiatives in other hydropower-rich regions worldwide.
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