I received some feedback from a veteran of the mining subindustry in China regarding my previous research on this space.

According to him there are a number of other moving pieces at play that are fluid will not necessarily last.

For instance, providers such as HashRatio have succeeded, not by designing their own chip but by figuring out the best combination of system and power configurations.  Going from chip to working system is non-trivial.   The end result are systems which are not necessarily pretty to look at, but they work.

One of the issues this new source had with my report was that because of guanxi is relatively hard to quantify, knowing whether or not you have the best price of a particular resource (like energy) is always a lingering question.  That is to say, even if Alice knows the boss of a coal mine, another competitor, Bob, may know his bosses boss which gives Bob even cheaper rates than what you thought you were receiving.  Improving guanxi is a millennia old Herculean task.

Some other highlights according to the source:

•        If Alice’s metric is purely dollars per ghash, the analysis was correct. This is because there are two important figures: Alice’s new ASIC kWh/hash multiplied by her electricity cost / kWh.
•        While Moses Lake is quoted in many news reports at being 1.7 cents per kWh, there are many other parts of the state which are very low, some averaging 2.3 cents per kWh.  And Washington has a much better infrastructure (both for electricity and internet) than China which makes it a very competitive geographic region.
•        Similarly, Russia is 1 to 1.2 cents per kWh, though, you would be in Russia.
•        China is cheap relative to a lot of countries, but relative to Washington and Russia the community capacity is still limited by State Grid, a large state owned enterprise (SOE) with a flat rate of 0.3 RMB kWh buying in any power station linked to it.  Miners will likely be unable to go under that.
•        While Alice can do some meter fiddling or go off grid power, those options are hard to find and probably will not last long.
•        State Grid has likely heard of bitcoin mining, but the wattage usage is not big enough to pique their interest or oversight.
•        Inner Mongolia, as part of China, has overinvested in wind farms.  Yet there are large areas that are not linked to the grid yet.  And due to the unstable nature of wind, as well as poor internet infrastructure, none of the mining pools has gone there yet.  And it is sparsely populated which leads to potential difficulties in sourcing human capital and talent to run a pool.
•        Mongolia, the country, imports roughly 10-20% of its electricity from Russia, so Bob might as well go to Russia if he is willing to set up a facility in Mongolia.