The Chinese Inner Mongolia Autonomous Region (IMAR) – a hub of crypto mining activity, especially Bitcoin (BTC) mining – could be set to order a shutdown of the industry, calling all operators to close up shop as early as next month and probably forcing them to greener sources of energy.
According to an official announcement, a new set of energy requirements is now in a consultation period, which will run until March 3. The measures respond to clean energy commitments and internationally agreed on 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. It 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 energy consumption growth to under 2% this year.
Even though the decision is not yet concluded, 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 outcome of a “blasting” from the National Development and Reform Commission, a critical 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 statement affirmed that the IMAR’s plans involved 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 stated 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.”
China’s state planner, the National Development and Reform Commission, has not yet released the new energy-saving targets for 2021-25, but the regional department has proposed reducing Inner Mongolia’s energy intensity by 3 percent for 2021 from 2020 levels while also capping its energy consumption growth at 1.9 percent. Small firms with outdated technology in the steel, ferroalloy, coke, graphite electrode, and coal-fired power sectors have also been given a timetable to close by the end of 2022.
The autonomous region of northern China will also control data centers’ size, the draft document revealed.
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