A Visit to a Bitcoin Mining Farm in Sichuan, China Reveals Troubles Beyond Regulation

As many small and medium-sized mining data centers in Sichuan, Guizhou, and Inner Mongolia are closed for the sake of “environmental protection”, the “green” ones that remain operational usually avoid media exposure. After talking with dozens of data center owners, news.Bitcoin.com was granted the chance to visit a mining farm in Chengdu only to find that miners there are facing more pressing problems than regulation.

Also Read: Chinese Bitcoin Miners Explore Relocating Abroad Amid Fears of Crackdown

Bitcoiners Negotiated with Hydropower Stations to Set Up Mining Farms

Following a four-hour fight from Hangzhou to Chengdu and a two-hour drive from the airport to a small village, we finally arrived at a hydropower station.

Electric transmission lines are installed from the station to the blue-roofed mining factory. There are three mining data centers and each has 2,500 mining machines. The operations manager Chuan told us that the electricity price has increased from 0.3 yuan per kwh to 0.4 per kWh as Sichuan is in its dry season.

We asked how he found the place and negotiated with local officials and he replied that starting a mining site is an investment with low thresholds.

This is actually a funny story. When we first met people at the hydropower station, we told them we were a cloud computing company, but the manager of the hydropower station laughed at us and said ‘Bullshit, I know you people came here to mine bitcoin. Just tell us what can we get’. As to local government, we don’t have to meet with any officials, the station will help coordinate. And who can get the right to set a mining factory? The rule is very simple: first come, first serve.

Workers Were Fired as They Were Caught Stealing Electricity to Mine for Themselves

The mining site is filled with massive fans. When we stepped inside the door, all of the workers turned their heads to look. Chuan leaned over and whispered “Excuse them, these boys haven’t met any visitors for a long time.”

The data center looks messy and dirty on account of all its hanging wires and mining rigs. Chuan said that they are shorthanded and need dedicated workers to take care of the machines.

“I fired three guys 20 days ago because I caught them stealing electricity to mine bitcoin for themselves. It is a public secret among workers. They always do this at midnight to escape attention. There is so much for these new guys to learn. I told them to close the door, but they have to keep the door open and dirt just settles everywhere around the mining rigs.”

Miners Are Plagued with Poor Management and Cliques at Work

At the data center, we saw two types of miners: Antminer for bitcoin, and GPU miners for ETH and Zcash. Chuan believes that Antminer is the best among Avalon and Ebit. They are ”low maintenance and energy saving”, says Chuan. The average shelf life of a miner would be two years. If anything goes wrong with machines that workers cannot fix, they just return them to the after-sales service. He added that he sees Ebit as the most direct competitor to Antminer.

When Chuan went to answer nature’s call, we had a quick chat with a worker standing by the door. He revealed himself to be a new graduate who found bitcoin mining “unreal” and decided to take the job. He used the word “exciting” to describe his life here. Whenever it’s lunch time, all workers will rush into the kitchen. If he acts slow, there will be no food left for him. And they all sleep in the warehouse, with the only entertainment the opportunity to exchange dirty jokes with one other. He further revealed that:

 There are many problems with mining farms like poor management, bad working conditions and cliques at work. Things must change if the business wants to sustain for the long-term.

Note: The mining site belongs to Ryan, an early bitcoin adopter in Australia. He owns several mining factories in China. This July, he was interviewed by China’s central television, only to suffer, after the program had aired, most of his Sichuan mining sites being closed. To compound his woes, he was cursed by Chinese miners for being “an idiot” and was labeled the most hated man in the mining industry. Large-scale bitcoin mining might sound like easy money, but as Sichuan’s miners will attest, it’s a stress-fraught job that’s plagued with risks.

What do you think are the main threats facing bitcoin miners? Let us know in the comments section below.

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Images courtesy of Shutterstock, and CCTV.

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via Cindy Wang