Inner Mongolia, which is an autonomous region within China, having a government that acts independently of the Chinese government, has decided to put a limit on crypto mining in the province. Five departments of the province’s government will work in co-operation to implement suitable restrictions on the mining of cryptocurrency, reportedly. The step has been taken as crypto mining is not working in favor of the economy and yielding some loss. A joint statement has been issued by the Financial office, Development and Reform Commission, the Office of the Ministry of Industry, the Big Data Bureau and the Public Security Department of Inner Mongolia, declaring,
The virtual currency ‘mining’ industry belongs to the pseudo-financial innovation unrelated to the real economy, and should not be supported.
These five departments of the government would work with each other to ensure that the crypto mining industry is prohibited from operating in Inner Mongolia and shut down in a phased manner. The first phase has begun on the third of this month and the second is expected to start on 10th October. The governmental agencies have already asked the crypto miners to close their mining operations, but no penalty or punishment for illegal mining has been chalked out yet.
Before the news had been officially confirmed, a China-based crypto news agency “ChainNews” had already hinted at this development implying that Inner Mongolia was planning to put a ban on crypto mining and other related industries in the autonomous province. The article had also mentioned five government departments would be conducting a “clean up and rectification process” on firms involved in “Bitcoin mining, cloud computing, and enterprises that deal with data centres and computing devices.”
Dovey Wan, who is a major venture capitalist based in China is of the opinion that the restrictions imposed on the industry in the province, would have a minimal material impact on the crypto mining industry. A majority of the crypto mining enterprises are concentrated in the Sichuan river region as the region abounds in cheap hydel power causing the government to siphon it to Inner Mongolia as it has cold weather, small population, and low land rates. Although Inner Mongolia has an autonomous government, the decision to impose the restriction can be seen in the context of China’s economic planning commission putting forth a proposal suggesting the dangers of Bitcoin mining. This coupled with the recent move by the Inner Mongolian government may virtually lead to a long-term decline of the nation’s crypto mining industry which has therefore kickstarted from September 3, the beginning of the first phasing out of crypto mining in the autonomous region.
However, cryptocurrency mining is rampant in China with an estimate suggesting that almost 70 percent of the Bitcoins have been mined from China. Crypto mining is particularly widespread in the Sichuan province of the nation, with Inner Mongolia occupying the top five spot in this. The predominance of the industry in the country especially in this province has made Wan, the founder of Primitive Ventures assume that the ban will not have a very significant effect as Sichuan already has as many as 30,000 illegal mining machines. Thus, it remains to be seen that how many of these mining businesses pass the inspection by the authorities and are labeled as “limited companies” which would gradually be asked to close their operations and what are its impending consequences on the industry as a whole.