21 Bitcoin Mining Farms Stripped of Electricity Perks in Inner Mongolia
A clampdown by the local government resulted in more than 20 Bitcoin mining farms having their electricity perks stripped off in China’s Inner Mongolia. On August 24th, a document was issued by the Department of Industrial and Information Technology of the Inner Mongolia Autonomous Region. It showed that a local electricity trade company had been asked by the government agency for disqualifying 21 bitcoin mining farms from participating in energy trading. The document was first reported by Wu Blockchain, a Chinese news source for all things crypto. However, no names were provided of the 21 farms that were on the list.
Some of the notable entities on the list include a subsidiary of Ebang, mining equipment manufacturer, and two subsidiaries of Bitmain, a bitcoin mining giant in Inner Mongolia. The list also includes a branch of China Telecom located in Inner Mongolia in the city of Ordos. This indicates that telecom giants may also be participating in Bitcoin mining activities within this region. An energy-trading firm in the region called Mongolia Power Group, which is owned by the state, was providing electricity discounts to these mining farms due to a liquid energy marketplace. However, these farms will no longer receive this discount after their suspension.
Co-founder and CEO of PoolIn, a mining pool based in China, Kevin Pan said that this policy would have a big impact on the whole industry, especially in the short-term. He said that the cost of electricity for these farms would increase by 0.1 yuan or $0.014 per kilowatt-hour (kWh). The region’s mining farms are currently paying 0.26 to 0.28 yuan or $0.37 to $0.040 per kWh, but the change in policy could increase the upper side of the electricity cost range to as high as 0.38 yuan or $0.054. Even though this difference seems rather negligible, the fact is that it will result in a significant increase in operational costs for crypto mining activities that require a whole lot of energy.
For instance, if the mining farm runs at a full capacity of 10,000 kWh, which is deemed as a small scale within the industry, an increase in $0.014 in cost per kWh would increase the daily operational costs by $3,360. Addressed to the Inner Mongolia Power Group, the document said that the suspension notice was issued after on-site inspections had been conducted by the government agency at more than 30 data and cloud computing companies and it was discovered that 21 of them were really crypto mining firms.
The region-wide inspections had begun last year and the aim had been to shut down bitcoin mining operations that didn’t have proper business registrations. They also targeted companies that were trying to get electricity perks by disguising themselves as eligible organizations. The Cambridge University had compiled the Bitcoin Electricity Consumption Index and it showed that as of April this year, more than 65% of the worldwide bitcoin mining computing power came from China. At that time, 8% of the total time of the network came from Inner Mongolia.