The Chinese Inner Mongolia Autonomous Region (IMAR) – a hub of crypto mining activity, particularly Bitcoin (BTC) mining – could be set to enact a shutdown of the industry, ordering all operators to close up shop as early as next month, and possibly pushing them to greener sources of energy.
Per an official announcement, a new set of energy requirements is now in a consultation period, which will run until March 3. The measures are a response to clean energy commitments and internationally agreed carbon emission targets for 2020, which China is unlikely to meet unless it cuts down on coal-powered energy generation.
The IMAR is the second-largest coal-producing region in China, and is also home to some of the nation’s oldest and highly polluting power stations – the power from which is often channeled into BTC mining.
The measures outline the IMAR’s aim to restrict growth in energy consumption to under 2% this year.
Although the decision is not yet finalized, some have already welcomed the news, including the head of crypto mining and blockchain heavyweight BitFury Group, who tweeted his approval that Beijing would be “shutting down Chinese miners operating on dirty coal.” George Kikvadze, Executive Vice Chairman of the group, wrote,
“Great news for the industry and non-coal operators!”
“[There are] two “dirty provinces” in Chinese mining – Xinjiang and Inner Mongolia where BTC is primarily (but not exclusively coal) (lots of wind in [IMAR]). Sichuan and Yunnan are “clean” (hydro). This is great news,” Nic Carter, Founding Partner of blockchain-focused venture capital firm Castle Island Ventures, added.
Bloomberg reported that the IMAR’s move was a direct result of a “blasting” from the National Development and Reform Commission, a key Beijing-run economic policy unit, which pointed out that all other parts of China had successfully controlled their energy consumption in 2019 bar the IMAR.
The report stated that the IMAR’s plans included the mission of cutting emissions “per unit of gross domestic product by 3% this year and control incremental growth of energy consumption at about 5 million tons of standard coal.”
Bitcoin mining also accounts for massive amounts of power consumption – much of it older coal-based – in the Sichuan, Yunnan and Xinjiang provinces, none of which have announced any plans along the lines of the new IMAR ruling.
As reported today, US-headquartered international banking giant Citi mentioned in their newest report on BTC that with asset managers increasingly focused on their own firm’s and their investment portfolios’ ESG (Environmental, Social, and Governance) impacts and with many institutional investors already leaders in the ESG space, this consideration might inhibit their interest in Bitcoin.
“That said, Bitcoin mining is slowly popping up in places where there is an ample supply of renewable energy but not a lot of demand, including in Texas,” they added.
– Bitcoin Mining in 2021: Growth, Consolidation, Renewables, and Regulation
– Don’t Blame Bitcoin Miners For Price Dips, Says Analyst
– Bitcoin Mining Becomes A Side Venture For Chinese Non-Crypto Firms
– Bitcoin Miners Buy Oversupplied Energy, Turn To Renewables – Nic Carter
– Ukraine Wants to Bolster its Budget with Nuclear-powered Crypto Mining
(Updated at 13:43 UTC with a comment from Nic Carter.)