Crypto mining firms based in Inner Mongolia have decided to shut shop amid strict regulations. A draft proposal that seeks to “shut down” all crypto mining initiatives expects mining firms to cease operations by April. Thus, companies that were once drawn to Inner Mongolia due to low electricity prices and its cold climate have now decided to move on.
As China seeks to meet energy efficiency targets, it recently planned to ban crypto mining in the autonomous region. Moreover, Inner Mongolia, which is powered by coal-based electricity, has remained unsustainable, recording a spike in energy intensity by 9.5% between 2016 and 2019. Overall, the region’s power consumption increased by 65.62 million tonnes.
Sichuan and Xinjiang are also popular mining hubs in the region and they might be provinces that these crypto mining firms – that are closing down next month – may relocate to. However, local authorities in China could impose similar restrictions elsewhere, since the mining ban in Inner Mongolia is spurred by President Xi Jinping’s decision to make all of China carbon neutral before 2060. A study found that Inner Mongolia accounted for about 7% of the global hashrate for Bitcoin, while China produced 71.7%, during 2019-2020.
While some mining firms could choose to remain in provinces that run on clean hydroelectricity, others could shift their firms abroad entirely. Mining firms in Inner Mongolia have faced bans or periods of stagnation. According to Jiang Zhuoer, CEO of BTC.TOP, “winter power shortage” in northern China was a primary reason for the frequent “regional and seasonal” halts.
Chinese crypto-journalist Wu Blockchain thinks that Sichuan, in particular, could become the “center of cryptocurrency mining in China and even the world.” He believed that the region’s “abandoned hydropower” could be a major attraction for crypto mining businesses that plan to leave Inner Mongolia.
Mining firms that had been based in China have already moved their operations to Kazakhstan, Iran, Malaysia, Iceland, and Myanmar among other nations. These companies are also already facing another predicament from a global lack of mining chips.