With this month’s dip in the Bitcoin network hash rate as result of heavy floods in the Sichuan province of China, that country has become a focus in the mining community as the government there continues its crackdown on mining.

Many of those miners moving from the flooded region had targeted the Xinjiang Uyghur Autonomous Region as an alternative location to set up new operations, but hopes have been cruelly dashed. A recent announcement has declared that Xinjiang is on a government hit list for a crackdown as China continues to put an end to what it calls “unofficial” domestic mining operations.

Li Yang, one of those affected by the Sichuan floods, owner of a USD 5 million mining rig, claims that the flooding cost him in the region of CNY 10 million (USD 1.5 million). Bitcoin miners like Li will now need to find an alternative location after the government’s latest announcement targeting Xinjiang.

Xinjiang Uyghur Autonomous Region is a provincial-level autonomous region of China in the northwest of the country. It is the largest Chinese administrative division and the eighth largest country subdivision in the world, spanning over 1.6 million km². Xinjiang Uyghur has become attractive to Bitcoin miners due to its cheap electricity rates and abundance of land.

The latest notice was posted by the Xinjiang Economic and Information Commission advising local unauthorized mining companies that they will need to close their operations by 30 August, essentially giving them just over a month to shut down. The companies have also been requested by local-government to report their activities to the commission.

More than two-thirds of the world’s processing power dedicated to cryptocurrency mining comes from China and it is home to some major hardware producers. Because most of the country’s electricity is state-sponsored the government cracks down hard on anyone attempting to tap into its supply without authorization.

It remains to be seen what steps China will take regarding crypto mining in the future with its continued state-run condemnation of cryptocurrency. Clearly many unauthorized operations are now casting an eye overseas.

The Chinese government regards illegal miners as “those that have not signed a contract with local power utilities, thus using electricity on a non-regulated basis”.


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