Authorities investigate illegal crypto mining facilities in China

Authorities in China’s Sichuan province are investigating reports of illegal Bitcoin Core (BTC) mining farms, after unauthorized mining rigs were discovered near hydropower stations in the area.

According to local reports, the land resource bureau in Garze county identified the illegal mining operations, which had been constructed without appropriate licensing from the authorities.

Garze county benefits from fortunate geography for BTC miners, with an abundance of water and mountainous terrain. With hydropower providing significantly cheaper electricity costs than usual amid the wet season, the location is seen as particularly suitable for those that would seek to miner without appropriate permissions.

As a response, the Economic and Information Bureau in Garze said it had formed a group with other agencies to investigate the illegal mining constructions. While the Bureau acknowledged the investigation, there were few details offered up about specific lines of enquiry. It noted, “We are still investigating on the issue and can’t disclose more details on the overall situation.”

In a front-page spread in a local newspaper, an expose found a bitcoin mining facility that had been constructed in Ginkang station, and had been running at 60% capacity, with scope for up to 50,000 mining units.

A spokesperson for the Bureau said in any event, it was important to investigate whether these constructions were legal:

“If [a BTC mining farm] is built within the authorized area of a power station for electricity consumption, we need to verify if their usage is legal. If it’s outside the authorized area, then it needs to be dealt with as the construction was not approved.”

With the rainy season fast approaching, mining firms are expanding capacity in Sichuan, hoping to capitalize on the lower energy costs from hydroelectric.

A report published last year found that almost half of the world’s BTC total hash rate was powered by resources in the region. The bureau spokesperson was unequivocal in the view that BTC mining operations were not permissible in the county, saying, “We don’t allow outside investment in the area to be involved in [BTC]. Even for big data projects, we will conduct an investigation into the nature of the data involved before making a decision.”