PBOC Mulls Plan to Throttle Bitcoin Miners Behind Closed Doors

The People’s Bank of China (PBOC) is reported to have held a closed-door meeting about closing Bitcoin mines on January 3. Tencent learned from two insiders that the closed-door meeting would not require all Bitcoin mines to shut down, but it would regulate some non-standard mines.

SEE ALSO: The National Internet Finance Association of China says Bitcoin becomes tools in criminal activities

A Bitcoin miner in Sichuan Province told Tencent the local government is investigating, and is requiring miners to register their business and regulate their electric consumption.

“Mining” refers to the process of using computer hardware solve mathematical calculations in accordance with Hush Rate. As a reward, Bitcoin miners can be awarded coins when they solve a block. This dull and repetitive process is known as “mining” in the bitcoin industry.

For miners, the largest costs are the initial investment in mining hardware and the electricity consumed to maintain daily operations. In order to reduce costs, most Bitcoin mines “settle with electricity.” Tencent previously reported that Inner Mongolia and Sichuan, known for their low-cost power, have China’s largest Bitcoin mines and a monopoly on coin production.

As for power sources, some miners have signed contracts with local power companies while others relied on hydropower in the provinces of Sichuan and Yunnan. “Sichuan has the most abundant water resources in China and thousands of large and small hydropower stations. There is abundant electric power. Sometimes, the supply of electricity exceeds demand. This means water that should have been used to generate electricity ends up wasted. We call it ‘abandoned water,'” a miner said. Bitcoin uses this power to generate electricity for the Bitcoin mines. Hydropower stations can make huge gains, and miners get the cheap electricity they need.