BTC heavyweights lose access to Inner Mongolia’s cheap power: report

Getting your Trinity Audio player ready...

Over 20 unnamed BTC mining operators in China’s Inner Mongolia were reportedly stripped of power subsidies by the Department of Industrial and Information Technology of the Inner Mongolia Autonomous Region. According to blockchain journalist Colin Wu, the disqualification comes after the government issued a new edict cracking down on digital currency mining farms.

Recent reports from CoinDesk indicated that industry titans Bitmain and Ebang were among those listed that felt the new policy initiative’s sting.

In a document reportedly given to the news outlet, officials suspended the industry giants from participating in energy trading in the region. They can no longer enjoy generous electricity discounts that come from the liquid energy marketplace provided by the Inner Mongolia Power Group, a state-owned energy trading firm.

Also allegedly on the list is the Inner Mongolia Branch of China Telecom, suggesting the telecom giant may also be involved in digital currency mining activities in Inner Mongolia. 

Kevin Pan, Founder/CEO of PoolIn, said the policy would have some impact on the industry, likely raising the electricity rate by $0.014 per kilowatt-hour (kWh). While this might seem negligible, it means a significant increase in operational costs for energy-intensive BTC mining activities.

The recent policy change came after region-wide on-site inspections in late 2019. Official discovered that some purported big data and cloud computing companies in the region were just digital currency mining farms in disguise. These firms attempt to qualify for electricity perks by disguising themselves as eligible entities.

Is this another indicator that the block reward mining sector is in the midst of a death spiral? 

The BTC mining industry has been in a gradual collapse since this year’s Bitcoin halving. Block reward miners can no longer kick the can down the road when it comes to their future. They must decide if they will embrace and advance enterprise adoption or continue operating based on the house of cards that is the BTC financial markets.