Coinspeaker
Mining Farms in Inner Mongolia Stripped of Electricity Incentives

21 mining farms in inner Mongolia are poised to pay higher electricity tariffs as the regional autonomous government wants to remove subsidy for miners. In a policy change announced by the Department of Industrial and Information Technology, the agency stated that 21 mining farms have been disqualified from energy trading in the region.

Although the names of the farms were not immediately published, available information shows that two mining farms operated by Bitmain were affected. Also affected is a subsidiary of Ebang, the mining giant that is a Bitmain competitor.

According to Wu Blockchain, a Chinese news platform dedicated to cryptocurrency news, also affected is China Telecom, whose inner Mongolia branch may have been involved in mining operations in the region.

The new policy effectively excludes the mining companies from incentives that supplied energy at a discounted price for a certain class of users. Inner Mongolia is among the regions with low power costs, which made it attractive to mining groups. With the exclusion, the inner Mongolia Power Group is sending a message that mining companies are to pay full cost for the energy supplied to them.

The policy would have some impact on the cryptocurrency market. This is the view of Kevin Pan, the CEO and co-founder of Poolin, a mining pool based in China. He said that the cost of electricity may rise by up to 0.1 Yuan per kilowatt-hour or the equivalent of $0.014.

Presently, the cost of electricity in the region is 0.26 – 0.28 yuan ($0.037 – $0.040) per kilowatt-hour. The new policy will see costs rise to 0.38 yuan ($0.054) per kilowatt-hour.

Although the increment seems negligible, for the power-intensive mining industry, it is quite significant since it increases, quite dramatically the overhead cost of operating a mining farm in the region. For instance, a 10,000 kwh consuming farm would incur an additional $3,360 daily with the increase. Considering that such a farm is considered small or moderate-sized, the cost implication for bigger mining companies is quite significant.

The document stated that the new policy was adopted because the agency discovered that many so-called data centers operating in the region are actually cryptocurrency mining companies. This revelation became obvious after officials visited some of these businesses.

Mining Farms in Inner Mongolia Stripped of Electricity Incentives

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