China’s Inner Mongolia Region Might Ban Crypto Mining
For years, China has been a hotspot for cryptocurrency mining. Lage mining operations have been set up in the country’s northern and central parts, looking to utilize the regions’ cheap electricity and good infrastructure. Some reports estimate that more than half of all Bitcoin’s hash power comes from China, with large mining facilities in China’s Sichuan province and Inner Mongolia backing these claims.
However, it seems that the glory days of mining in China might be coming to an end. According to the latest report from CNBC, the country’s Inner Mongolia region has set out plans to ban new cryptocurrency mining projects and shut down all existing activity in the area. The region’s cheap electricity and optimal weather conditions have attracted a large number of major mining operations—the region alone now accounts for around 8% of all the Bitcoin mining in the world, CNBC reported.
The reason behind this decision stems from China’s central government. Namely, the region failed to meet central government assessment targets regarding energy use both in 2019 and 2020. As a result, Beijing forced Inner Mongolia to lay out plans to reduce energy consumption in the region.
Inner Mongolia’s Development and Reform Commission (DRC) has reportedly decided to shut down all existing cryptocurrency mining projects by April this year and stop approving any new projects applying for permits. According to the official proposal published last week, the move will help the region achieve the energy saving goals set under China’s 14th five-year economic plan that spans from 2021 to 2025. To further curb down energy consumption in the mostly industrial region, Inner Mongolia also plans to reassess other energy-intensive industries such as steel and coal.
After Sichuan and Xinjiang, the Inner Mongolia region is the third-largest Bitcoin mining hub in the country. Unlike mining operations in Sichuan, which rely on hydroelectricity, the ones in Inner Mongolia rely on local fossil power plants.
However, despite heavy media coverage, the plan to shut down crypto mining in the region still remains just a plan. The Development and Reform Commission, a local branch of China’s National Development and Reform Commission (NDRC), has set up a public consultation period that will last until March 3rd, when the commission will modify the proposal if it receives enough public feedback.
This also isn’t the first time the region tried to curb down cryptocurrency mining. Back in 2019, NDRC, the country’s highest level economic planning government body, added cryptocurrency mining to a list of industries that should be eliminated from the country. And while NDRC removed any mention of crypto mining from the list after a public discussion, Inner Mongolia began its own efforts to curb down mining activities in the region. In August 2020, the local government devoid 21 major mining farms from their electricity perks, including the mining farms belonging to Bitmain and Ebang, two of China’s largest mining hardware manufacturers.