There are suspicions that the reason would be related to the fact that mining companies have contributed little to the regional economy, says a report from the Weixin media.
The Department of Industry and Information Technology of Mongolia, north China, said in a statement that it suspended subsidized electricity to 21 cryptocurrency mining farms. Among those affected is AntPool, one of the world’s top five bitcoin mining pools, owned by the manufacturer Bitmain.
The Inner Mongolia government suddenly determined that it was necessary to cancel the preferential prices for electricity service for cryptocurrency mining. Although the real causes that prompted the measure are unknown, there are suspicions that the reason would be related to the fact that mining companies have contributed little to the regional economy, says a report from the Weixin media.
Another element that may be related to the move is the following of an assessment last year. The Inner Mongolia inspection team concluded that 6.732 million yuan ($ 960 million) could be recovered after removing certain entities from the grant.
The measure will reduce the profit of the farms involved, whose costs will increase by at least 33%. They will no longer have access to energy rates that ranges between 1 and 3 cents per kilowatt. The miners installed in other areas of the country like Xinjiang, fear that resolutions of this type will also affect them now, according to the same media outlet.
What happens in Mongolia
Inner Mongolia has been contributing about 10% of the hash power of the Bitcoin network that is produced in China. The country concentrates a monthly average of 65.08% of the world total, as can be seen in the bitcoin mining map of the University of Cambridge.
The northern part of China has been favorable for the settlement of mining farms that find in the region a cool climate, cheaper labor, and, so far, cheaper energy compared to other parts of the country. Due to the new electricity tariff, mining companies may consider setting up in other regions where their revenues will not be affected.
Electricity has been cheaper in Inner Mongolia since the Electric Power Distribution Center, the first provincial power market to formally function in China, was founded. This center offers lower prices for electricity service concerning the rates that exist in the rest of the country. Many in the region believe that access to cheaper electricity will allow the development of infrastructure that will boost the economy of Inner Mongolia.
The dismantling of mini-projects
The local government of Dehong Dai and Jingpo Autonomous Prefecture in western Yunnan demanded the dismantling of 57 Bitcoin mining projects. These governments have considered cleaning up the mining businesses.
On the other hand, the study takes into account that the Chinese government has been increasing the pressure on mining and mining equipment manufacturing companies in the country. The regulation of electricity price and land use in China has caused a geographic diversification of the industry. Currently, Thailand, Canada, and the United States of America are offering miners competitive rates in terms of electricity costs.
By: Jenson Nuñez
