- The price of electricity in Inner Mongolia is very low for cryptocurrency miners.
- The government is set to remove subsidies, which would increase the price by nearly one-third.
- The price will remain low by international standards, but higher than in other parts of China.
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The Inner Mongolia Department of Industry and Information Technology has reportedly threatened to remove electricity subsidies for bitcoin mining companies, which would raise rates by nearly one-third.
The department issued a notice to the Inner Mongolia Electric Power Group notifying it that 21 of 30 companies visited for inspection in 2019 did not meet the qualifications to receive rates they can get from participating in the Inner Mongolia Electric Power Multilateral Trading Market, Chinese reporter Colin Wu reported.
The semi-autonomous region of China, the country’s third-largest region in terms of area, has had an up-down relationship with cryptocurrency miners. Some in the local government have seen cryptocurrency as a way of bringing money into the economy; while Inner Mongolia is rich in resources, its near-Arctic geography can limit growth.
The local government has for several years given Bitmain and cryptocurrency mining farms access to 30% off the standard price of electricity via the trading market. As a result, Inner Mongolia crypto miners enjoy some of the lowest industrial electricity rates in the world.
China itself already has some of the lowest electricity prices of any country, not taking into account government subsidies or other incentives.
According to the reports, the average kilowatt hour miners would need to pay is jumping to 3.8 RMB/kWh from an average of 2-3 RMB/kWh. Although still competitive internationally, this is far more than what miners pay in hydropower-rich Shichuan, where the blessings of heavy rains, rocky geography, and an oversupply of power-generating dams mean that electricity can cost as low as 0.3 RMB/kWh during the region’s peak rainy season.
While this excess of power has caused the Chinese mining industry to cluster in the region, the continued threat of extreme weather has prompted some miners to seek alternatives.
However, the lure of cheap power has thus far prevented an exodus.