In the spring thaw, snowmelt from Sichuan’s towering peaks swells mountain rivers, powering thousands of hydroelectric stations across China’s most water-rich province. In Chengdu—the operational hub of this vast energy network—a different kind of gold rush is quietly unfolding. Here, a new breed of digital prospector thrives: cryptocurrency miners who chase cheap, renewable power to fuel their high-performance machines.
These miners aren’t digging for ore—they’re harnessing flowing water to generate computational power, solving complex algorithms in pursuit of Bitcoin and other digital assets. Since Bitcoin’s inception in 2009 by the pseudonymous Satoshi Nakamoto, the digital currency has surged from fractions of a cent to over $60,000—creating millionaires and reshaping financial landscapes.
At the heart of this movement is Yuan Xiaoliu, a 90s-born engineer turned mining veteran. Over four years, he transformed from a hydroelectric technician into a seven-figure earner—riding the tides of energy, technology, and market frenzy. His journey reflects both the promise and peril of crypto mining in China’s unofficial “Mining Capital”: Chengdu.
The Power Behind the Proof-of-Work
Bitcoin mining operates on a principle known as proof-of-work: miners compete to solve cryptographic puzzles using specialized hardware. The winner adds a new block to the blockchain and earns newly minted coins. But success hinges on one critical resource: electricity.
This is where Sichuan shines. During the wet season (May–October), excess hydropower floods the grid. Rather than waste it, energy providers lease surplus capacity to miners—offering some of the world’s lowest electricity rates. In 2020, prices dipped below $0.03 per kWh, making Sichuan a magnet for global mining operations.
Yuan’s company initially resisted partnering with miners. But faced with routine “curtailment”—the forced shutdown of generators due to grid overload—they saw an opportunity. By building infrastructure to host mining rigs—transformers, cooling systems, secure facilities—they turned idle energy into revenue.
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The return was staggering. A 50 MW load consumes roughly 1.2 million kWh daily. At $0.03/kWh, that’s over **$1 million in monthly gross income**—with payback periods as short as two months during bull markets.
As demand grew, so did competition. Prices dropped steadily:
- 2017: $0.035/kWh
- 2018: $0.030/kWh
- 2019: $0.024/kWh
- 2020: below $0.021/kWh
Miners no longer need to pay a full month’s deposit—just half—to secure space.
With Inner Mongolia banning crypto mining in 2021, operators flocked to Sichuan, further intensifying demand. International players now eye Kazakhstan, Russia, and even parts of Africa—but few match Sichuan’s blend of stable supply, low cost, and mature ecosystem.
Inside the Mining Arms Race
Yuan didn’t stay a passive host. By 2019, he began mining himself—starting with Antminer S9 units. But he quickly learned that mining isn’t just about hardware and power.
Security risks emerged early. The S9 models were vulnerable to malware disguised as “free antivirus tools.” Once installed, these programs siphoned off 5–10% of computing power, silently mining for third parties.
Operational challenges followed. Mining farms run at over 100 decibels—equivalent to a chainsaw—with relentless heat output. Cooling requires industrial fans (1500W each), and staff endure grueling conditions. To retain talent, salaries often exceed $1,500/month.
Hardware scarcity became another bottleneck. In 2021, due to supply chain disruptions and surging demand, new ASIC miners sold as futures—with delivery delays stretching months.
Yuan placed a $300,000 deposit for Avalon miners—set to arrive in May 2025—priced between $450–$480 each. Meanwhile, Antminer S19 models jumped from **$1,500 (late 2020) to over $6,500** by early 2025 for late-year delivery.
Even consumer GPUs became financial instruments. NVIDIA’s RTX 3060, originally priced at $3,000, fetched nearly $6,000 after miners bypassed its Ethereum hash rate limiter.
“Some people buy them to game,” Yuan laughs. “Then sell after a few months and basically get the card for free.”
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Wealth, Regret, and the Psychology of Holding
Yuan’s biggest lesson? Timing and temperament matter more than tech.
In late 2024, after months of mining profits, he sold his entire fleet of 2,000 S9 miners—for about $90 each—as scrap. He believed Bitcoin had peaked at around $14,500.
Months later, Bitcoin soared past $60,000—and those same machines resold for nearly **$2,000 apiece**.
The buyer? A former acquaintance who later showed up at a Chengdu nightclub driving a Lamborghini.
“He went from living in a mountain cabin to buying a $20,000 bar membership on impulse,” Yuan recalls. “But I made over a million that year too—so I just smiled.”
Others weren’t so lucky. A company executive once held 500 BTC when prices were just $450 each. He cashed out, bought property—and missed a 130x gain.
“Real estate feels safe,” Yuan notes. “But digital assets move faster.”
The volatility tests nerves. In 2019, BitYi founder Hui Yi died by suicide after a leveraged trade collapsed. In 2024, another trader lost $2 million during the “March 12 crash” and left the market broken.
Yuan avoids leverage entirely.
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Yet long-term holders exist. A friend who accepted two BTC as payment in 2021—worth ~$29,000 then—now holds over **$70,000 in value**, enough for a down payment on a Chengdu apartment.
The Future of Digital Gold
Despite warnings—from French economist Éric Pichet comparing Bitcoin to Tulip Mania to U.S. Treasury Secretary Janet Yellen calling it inefficient—the rally continues.
Young investors see crypto not as speculation but as a new financial system. In Japan, nearly 40% of new crypto accounts in early 2025 belonged to users aged 20–29.
Altcoins like Ethereum and Litecoin have surged alongside Bitcoin—and even Dogecoin gained value thanks to Elon Musk’s endorsements.
“I got free Dogecoins from a mining bonus,” Yuan says. “Never thought they’d be worth anything.”
Even skeptics like Howard Marks of Oaktree Capital remain silent—refusing to speculate on what they don’t understand.
But for miners like Yuan, faith persists.
As the 2025 wet season approaches, he prepares for another round of mining—with a personal mission.
“I’m going to be a dad soon,” he says. “I’ll save my first mined Bitcoin for my child. Give it to them when they turn 21 or get married.”
He pauses.
“Elon said Bitcoin could hit $1 million by then. I’ll drink to that.”
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Frequently Asked Questions
Q: Why is Sichuan a hotspot for Bitcoin mining?
A: Sichuan generates massive hydropower during its wet season (May–October). Excess electricity is offered at ultra-low rates—making it ideal for energy-intensive mining operations.
Q: How profitable is Bitcoin mining in 2025?
A: Profitability depends on electricity cost, hardware efficiency, and Bitcoin price. With power under $0.03/kWh and current prices above $60,000, well-run farms can achieve strong returns—even amid rising hardware costs.
Q: Are ASIC miners still worth buying?
A: Yes—but only with long-term planning. Due to high demand and supply delays, buyers must treat ASICs as long-term investments rather than quick flips.
Q: What are the biggest risks in crypto mining?
A: Key risks include regulatory changes, hardware obsolescence, electricity price fluctuations, malware attacks, and emotional decision-making like panic-selling during market dips.
Q: Can individuals still profit from mining today?
A: Solo mining is nearly impossible due to high competition. However, joining large mining pools and optimizing operational costs can still yield profits—even for small-scale operators.
Q: Is crypto mining environmentally harmful?
A: While Bitcoin consumes significant energy—ranking among top global nations in usage—mining in Sichuan relies on renewable hydropower, reducing its carbon footprint compared to fossil-fuel-dependent regions.