The former director of Bitmain’s mining farm, a leading bitcoin mining operation, once said the wet season may not be as much of a boon for miners as many thought. As he expected, mining farms in Sichuan currently report that the supply of slots for mining equipment has far exceeded the demand.
The wet season in Sichuan usually begins in April and ends in October every year. During this time, the cost of electricity can be as low as 0.25 yuan for a Sichuan mining farm, which should be very attractive for miners. The price of electricity is around 0.35 yuan in Xinjiang and Inner Mongolia.
Some industry insiders speculated that 80 percent of the mining farm operators in Xinjiang and Inner Mongolia would move to Sichuan and Guizhou due to this price difference. It was also reported that many farm operators started their migration even before the Chinese Lunar New Year in February because they couldn’t wait to make a profit during the drawn out “crypto winter.”
So, it comes as a surprise that there are more miners available than there is demand.
According to the founder of Tiantian Ming Farm, mining farm operators have added 500,000 slots compared to the same period last year but haven’t sold much of them yet. The balance of supply and demand has been broken.
In addition, there is more bad news for mining farms: the standard market price of electricity in Sichuan is 0.25 yuan, but many mining farm operators cut this electricity price under the table in order to sell their mining slots faster.
Bitdeer appears to be the first firm to initiate a price war around these low costs. The firm launched a “Wet Season Combo” with an extremely low electricity cost of 0.22 yuan on March 30, 2019.
It seems that the majority of crypto miners have now learned to evaluate and investigate before impulse investing. Perhaps the market is becoming more rational.