Regulators in China’s Inner Mongolia region have released new plans to stop all cryptocurrency mining operations taking place within its borders.
Citing the need to decrease growing demand for energy the Inner Mongolia Development and Reform Commission published an energy-saving plan on Feb. 25 ordering all ongoing Bitcoin mining operations to stop and prevent new ones from being established in the region. All mining operations have until the end of April to cease their operations or relocate outside of Inner Mongolia.
One of China’s largest bitcoin mining regions, Inner Mongolia’s electricity generation comes largely from highly polluting coal-burning power plants. It accounts for about 8% of the total global bitcoin mining. Yet Beijing has been pushing for more renewable energy for years, as pollution levels grow.
This action is far from being unprecedented, and has pushed mining operations underground before. At the end of 2020, the “national” power company of the breakaway Georgian region Abkhazia has ordered an immediate stop to all local cryptocurrency mining activity following local problems with the energy grid. Earlier during the same month, Russian power firm Rosseti announced that the firm fears that record high Bitcoin (BTC) prices may spur a new wave of illegal cryptocurrency mining operations threatening Abkhazia’s energy grid.
While the cryptocurrency industry has been touting the growth of environmentally friendly cryptocurrency mining using renewable sources like hydroelectric, the majority relies on dirty coal. The problem is bad enough that BCA Research predicted last week that corporate investors will flee BTC over concerns it will damage their green credentials—something Tesla has been hit with since announcing it had invested $1.5 billion in Bitcoin on Feb. 8.
Still, interest in renewable-focused mining has been growing. On Mar. 3, Bloomberg reported that environmentally friendly Australian firm Iris Energy has doubled its latest fundraising round’s target from $20 million to $40 million.
China’s Inner Mongolia is one of the most attractive spots for Bitcoin mining in the country and worldwide alongside Sichuan and Xinjiang due to low electricity prices. China as a whole is so attractive for cryptocurrency mining operations that it attracted about 65% of worldwide Bitcoin’s hash rate—which caused the United States intelligence head to ask the Security and Exchange Commission to investigate Chinese control over cryptocurrencies at the end of last year.
Other than cryptocurrency mining, Inner Mongolia’s new restrictions also prevent other industries that consume large quantities of energy from establishing operations in the region. The Inner Mongolia Development and Reform Commission is attempting to cut the amount of energy consumed per unit of economic growth by 3% compared to last year’s levels with this directive.
Some work is being done to avoid China holding too much of the global crypto hashrate, and now Inner Mongolia is seemingly helping in this effort. As Modern Consensus reported in late August, venture capital firm Digital Currency Group launched an initiative meant to create greater access to digital asset mining in North America.