China currently tops the world’s Bitcoin mining market, which has helped the industry get access to digital assets to prevent absolute scarcity. The region in China, which is called Inner Mongolia, plans to outlaw mining to help the area conserve energy. Experts understand that the mining process needs a lot of equipment and power, making it hard for many people to mine Bitcoin and other cryptocurrencies.
But with this proposed ban, the industry might feel some of its effects, including skyrocketing of digital asset prices. In the past, investors blame the continuous mining activities as the reason behind sudden price corrections, but now, sell-offs might reduce when lesser assets are available in the ecosystem.
Inner Mongolia to reduce power consumption
Inner Mongolia’s government hopes to reduce energy consumption within the region, resulting in numerous proposals to regulate electricity users. One of the regulations includes the prohibition of Bitcoin mining, which is prevalent in the region. The country had previously announced a commitment to carbon neutrality, and the ban is one of the measures it puts in place to correct that issue.
China wants to reduce around 2% of its power consumption by this year, and it’s already getting proposals to accomplish that aim. The Asian country, being a populous country, spends a lot of money on energy yearly to fund its citizen’s power usage.
The Inner Mongolia Development and Reform Commission drafted the proposal while sharing the public’s new developments. The government mandates all Bitcoin mining farms to be shut down by April’s end this year.
The proposal also allows public consultation that can only happen before March 3. The region’s new laws would make it hard for miners who get their livelihood through mining, thereby causing unemployment for some. The news would cause a lot of crypto operators to exit the region for more mining-friendly areas.
China hopes to achieve carbon neutrality
Inner Mongolia is very popular amongst Chinese miners due to the region’s cheap electricity because of the massive coal mines around the area. Coals are an effective energy source, making power cheaper for residents. But non-residents have moved to Inner Mongolia to consume the affordable data to save the cost of Bitcoin mining.
Experts understand that if China’s law on lowering electricity is fully implemented, the industry will find it hard to get Bitcoin to sell to investors. Demand for Bitcoin and other cryptocurrencies is growing rapidly, thereby bringing in more tension on miners. If Chinese miners exit the industry, it could lead to some problems.
Colin Wu spoke on carbon neutrality and added that the reason behind the country’s aim to commence the plan is to reduce the consumption of coal for power. The region’s power is primarily gotten from coal, being the reason for the proposed regulations.
The analysis shows that Inner Mongolia’s energy would become more expensive, thereby taking miners to other Chinese regions with affordable power. The most likely location for the industry participants is Yunnan, known to have cheap power while using hydro as its source.