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Block reward miners from the Chinese region of Inner Mongolia can no longer access state-subsidized power to run their operations, according to reports from Chinese news outlet Weixin.
This move, which will increase the overall electricity price by roughly 33%, has aroused concerns with block reward miners in other regions, such as nearby mountainous region Xinjiang, leaving many worried that local officials there might take similar actions.
Blockchain journalist Colin Wu posted on social media that authorities at the Inner Mongolia Department of Industry and Information Technology issued a policy on August 24, requiring the cancellation of preferential electricity prices for digital currency mining farms.
What prompted the decision is some local officials raised concerns around the mining firms that hold licenses to receive subsidized electricity. Some feel there is an overall lack of incentive for the local government and cited non-existent benefits to the broader Mongolian regions from supporting mining businesses.
Northern China’s naturally cold climate, access to a low-cost, capable workforce, and government policies like subsidized electricity have historically supported mining companies’ growth in the region. Big mining cohorts, such as AntPool, are based in the area that contributes massively to China’s 60% overall market share of the BTC hash rate.
Reports say the move affects at least 21 mining businesses; however, no specific names were disclosed. It is unknown whether this decision will be a short-term measure or if it will continue indefinitely.
This policy move is not the first time Chinese authorities have cracked down on block reward mining in Inner Mongolia. In September 2019, officials took actions to clean up “illegal” digital currency mining facilities capitalizing on subsidized electricity.
Because of China’s regulatory inconsistencies around digital currency mining farms, local block reward miners have been expanding their footprint, searching for alternative locations in nearby regional countries with abundant cheap natural energy sources. High on their list has been Iran and Kazakhstan.
Officials’ action is further proof that there is no more denying the block reward mining sector has rapidly devolved into a disaster this year. Cheap electricity is not the only unit block rewards miners should focus on when plotting out their future. They are losing out of an even more precious commodity, which is time. Companies like TAAL (CSE:TAAL | FWB:9SQ1 | OTC:TAALF) have shown the future; block reward miners will need to get on board soon or get left behind.
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