Regulators in the Chinese autonomous province of Inner Mongolia has issued a notice demanding a clean-up of the province’s crypto mining enterprises.
A majority of the world’s cryptocurrency mining activity is concentrated in China because of its abundance of cheap electricity. Other provinces including southwestern Sichuan and Yunnan with inexpensive hydroelectric power are also popular among crypto miners.
Inner Mongolia’s municipal-level governments in recent years have looked to cryptocurrency mining as an opportunity to transform its less-developed economy: Mining operations have established partnerships with local governments to gain access to cheap power.
However, there are still many small-scale, illicit mining operations in China that are flying under the radar. China government is carrying out an inspection to eliminate “illegal” bitcoin mining operations by October.
“The inspection is directed by the central government, rather than a standalone plan initiated by the local government,” according to an industry executive involved in the planning process.
“The move reflects the nationwide phase-out plan on the bitcoin mining,” the source added. The government’s proposed plan in April, pending final approval, is to drive out the digital currency mining industry from China.
Existing Bitcoin Mining
Existing bitcoin mining businesses that pass the inspection will be categorized as “limited companies” that should pay the official electricity rate and not negotiate with power stations directly. They would still be expected to shut down their mining operating in the near future.
The municipalities are carrying out the inspections from Sept. 3 to Sept. 25 and then.reporting their findings to the regional government, which will form a team to investigate the findings from each jurisdiction from Oct. 10 to Oct. 20..
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.
Such conditions help miners by reducing their biggest cost – electricity – cooling equipment more quickly and avoiding densely populated areas that would be bothered by noisy operating machines. Bitmain, one of the largest bitcoin mining companies, has had operations in the region.
Trading and possessing cryptocurrencies is illegal in China as part of broader currency controls, but crypto use is prevalent on the black market.