Bitcoin miners in China are losing access to cheap electricity

According to the local news channel Weixin, Bitcoin miners (BTC) in China’s Inner Mongolia Autonomous Region will no longer have access to subsidized electricity.

The naturally cold climate of northern China, access to cheap labor, and government policies that supported subsidized electricity. All this has always supported the growth of mining companies in this region. The largest companies, such as AntPool, which earn hundreds of millions of dollars each year, are located in the region and are part of a mining force that contributes to China’s massive 60% share of the total Bitcoin hashrate. But that could probably change.

Bitcoin miners in China will lose some of their profits

“China’s Inner Mongolia suddenly issued a policy on the 24th, requiring the cancellation of preferential electricity prices for the crypto mining, which will increase the overall electricity price by about 1/3,” said Colin Wu, a reporter in China who specializes in mining and regulation in the sector.

The move was taken after authorities raised concerns about mining companies holding licenses to obtain subsidized electricity. The main problem was the general lack of incentives for local government and the lack of benefits for the wider Mongolian regions from supporting mining companies.

“Mining has nothing to do with the real economy,” the report said last year.

Wu added that the move will see electricity prices for miners rise by more than 33 percent, and they also reportedly fear that Xinjiang – a nearby mountain area in northwest China – will follow suit. This concerns at least 21 mining companies, including some of the “biggest players”, the report said. However, he added that “not all companies” operating in the region were affected by the change. However, no specific names have been published.

Bitcoin mining – while attractive as a huge revenue company – is a pioneering business with operators constantly struggling with high operating costs and government regulations to tune profits. And for mining companies in Inner Mongolia, this narrative has become even more difficult. An increase in electricity rates means a direct impact on profitability. But for the rest of the world, the conditions of the game will become much more balanced.

Whether this situation will lead to a decrease in the hashrate coming from China, which accounts for 60 percent of Bitcoin’s total hashing power, time will tell. What impact do you think this will have on the crypto industry?

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