Chandler âGuo: Chinese Electricity Companies Are Using Surplus Energy to Mine Bitcoin
Chandler Guo, a prominent bitcoin investor in major bitcoin mining pool Bw.com and various Ethereum Classic startus, recently revealed that Chinese electricity companies are using surplus energy to mine bitcoin.
Over the past 6 months, capital controls in China have become increasingly tight. The Chinese government has begun to regulate foreign investments of large corporations and lately began to restrict the importation of gold to prevent capital from leaving the country.
All of these efforts are a part of the Chinese governmentâs initiative to stop the devaluation of the Chinese yuan, which has recorded a 5.8% decline against the US dollars.
With gold being heavily restricted, the only viable safe haven asset that has high liquidity and stable global exchange rates is bitcoin, which can also be obtained easily in the countryâs over-the-counter market without falling under money transmission regulations.
Guo, who operates a large-scale mining pool in China, recently stated in an interview with Ether.camp that Chinese electricy companies are mining bitcoin to monetize their left over energy or electricity. Instead of building a surplus of energy that is substantially larger than the demand from local companies and households, Chinese electricity companies have begun to allocate the energy on bitcoin mining.
âToday, the energy companies are jumping on the bitcoin mining business,â said Chandler Guo. âBefore that, we [miners] bought electricity from them [energy companies] to mine bitcoin. Today, the seller who is selling electricity to us, theyâre mining bitcoin by themselves.â
Considering the current economic instability in China, the utilization of surplus energy to immediately monetize their unused product is a financially viable and practical business model. Particularly because cash and other forms of assets are heavily regulated by local authorities.
Although bitcoin miners are forced to overhaul their mining infrastructure every few months due to the rapidly increasing production of enhanced and efficient mining chips, the majority of costs in mining bitcoin originates from the electricity supply. Thus, having a free supply of electricity to mine bitcoin could generate an enormous amount of profit and certainly increase the profit margins of participating miners or the electricity companies themselves.
â[Energy companies] donât sell electricity to us, they buy mining equipment from us,â said Guo. âA lot of energy companies are becoming bitcoin miners. Even small energy companies can buy at least 1 to 2 petahashes.â
As mainstream companies and large-scale investors become interested in the backend operations of bitcoin such as bitcoin mining, Guo firmly believes that the mining ecosystem will evolve and grow at an unprecedented pace.