A few days ago, we published a small article relaying a new pressure blow that China had just put on cryptocurrencies and mining. We should probably bring another look at these decisions in view of the information that has been coming in since the last few hours regarding the multiplication of power cuts in the country.
Massive power outages bring factories to a halt
The Chinese central authorities have just put in place drastic measures of electricity rationing. These measures are highly localized and strongly affect the provinces of Guangdong, Zhejiang, Jiangsu and Anhui where most of the production sites are based. Some factories and their subcontractors now have limited access to electricity. The authorization is sometimes for 2 to 3 days a week, sometimes only during the night.
It goes without saying that this has a considerable impact on the production capacities of the majority of the country’s factories. The repercussions are already being felt with longer production times and delayed shipments.
A combination of problems
China thus seems to be plunging into an exceptional energy crisis caused by a chain of problems. The past summer heat has led to an explosion in electricity consumption to run air conditioning systems. The rebound in global activity has also put the country’s production capacity in the red. At the same time, the central government of Xi Jinping has committed to reaching its peak carbon emissions by 2030 and then neutrality by 2060. The authorities have thus put very strong pressure on nearly half of the provinces to control consumption. Indeed, hydroelectric production is at half-mast due to low rainfall, resulting in massive recourse to coal-fired power plants.
In order to comply with the requirements of the central authorities, some provinces have therefore just decided on consumption restrictions. Obviously, mining activities could not escape the situation, they are primarily targeted.
China’s production down, semiconductors still affected
Of course, this situation also affects the population. In some places, residents are asked not to run their air conditioners below 26 degrees or take the elevator for anything. Les Echos tells us that the opening hours of shopping centers are reduced to limit the use of air conditioning and lighting. In the north of the country, it is recommended not to use water heaters or microwave ovens during peak consumption periods. But beyond this economic setback for the population, there is also the production of aluminum that is impacted. Aluminum is also used for the supply of capacitors and as an important passive component for electronics and computing in general.
