A new policy adopted by local authorities in China’s Inner Mongolia will see Bitcoin miners operate their mining farms in the region without subsidized electricity. This is assumed to raise the electricity fee by 33 percent, which would directly affect their profitability. More fears are hovering on whether nearby regions will join the same trend.
Bitcoin miners lose access to cheap electricity in Mongolia
As reported by the local news outlet Weixin, the authorities in Mongolia adopted the new policy on Monday. The policy sought the termination of subsidized electricity for Bitcoin miners and other related mining operations in the region. The development was also confirmed by Colin Wu, a Chinese reporter who is mostly focused on cryptocurrency mining and other industry regulations.
“Exclusive: China’s Inner Mongolia suddenly issued a policy on the 24th, requiring the cancellation of preferential electricity prices for the crypto mining, which will increase the overall electricity price by about 1/3.”
Given that Bitcoin miners spend the most on electricity bills due to the high energy consumption of mining machines, their profitability somewhat revolves around cheap electricity. Thus, cancelling the subsidized electricity for miners in the region might affect them.
Will other regions follow a similar trend?
China has been the most convenient hub for crypto miners following the government policies, and primarily, the cheap electricity in many regions in the country. This explains the reason why the country houses the most Bitcoin network hash rate – about 60 percent. The recent action of Mongolia authorities is expected to affect about 21 mining companies, at least.
The companies include one of the biggest mining pools, AntPool, which nets hundreds of millions annually from mining operations. According to Wu, several Bitcoin miners are also worried that other neighboring regions like Xinjiang will follow a similar trend.