Regulators in China’s Inner Mongolia Stop Preferential Electricity Treatment for 21 Crypto Mining Farms
The recent document shows China’s Inner Mongolia government launched on-site inspection on 30 big data and cloud computing enterprises in 7 cities, and found, requiring suspension of 21 crypto mining enterprises’ qualification to trade in “electric power trading center”.
There are 21 large crypto mining farms in the list, and the rest are mainly IDC enterprises. But there are also mining companies that are not on the list.
Founded in 2006, Inner Mongolia ‘electric power trading center’ was the first provincial power market formally operating in China as a multilateral trading market. As of October 2019, the number of members of the power market has reached 1820, thus reducing the power consumption cost of enterprises by 30.01 billion Chinese yuan. The multilateral trading market enables the relevant power suppliers and power consumers to determine the electricity price in a more flexible way, which is different from the unified pricing of the country.
Inner Mongolia, in northern China, is among the most suitable areas to operate bitcoin mining businesses thanks to its cheap electricity supply, low land prices, cold weather, and a small population.
For the crypto mining farms, after participating in multilateral trading of power, the electric charge is 2-3 cent kW·h. If those farms are unable to participate in the multilateral transaction, the power consumption cost will be as high as 3.847 cents, while others speculate that the electric charge of large industries is 0.47 cent. This means that the electricity charges for crypto mining farms in Inner Mongolia may rise by 30%.
For the crypto mining industry in China this year, there are some variables in the policy. Sichuan has encouraged blockchain companies to help consume excessive hydroelectricity in the rainy season, while Yunnan is cracking down on the traditional direct power supply. The crackdown in Inner Mongolia has aroused concerns from all walks of life about the coming dry season, especially whether the crypto mining farms in Xinjiang will be affected. At present, the electric load of mining farms in Inner Mongolia is lower than that of Sichuan and Xinjiang.
But generally speaking, there are some trends in the legalization of crypto industry. Sun Guofeng, director of the Monetary Policy Department of PBOC, disclosed that the regulation of ICO regulations was discussed in the last revision of the securities law. The Supreme People’s Court and the National Development and Reform Commission also stressed that “the operation value of enterprise property shall be maintained as far as possible. We will strengthen the protection of new rights and interests for digital currency, Internet virtual property and data.