A threat to Bitcoin mining?
In Inner Mongolia, an autonomous region in northern China, new regulations on cryptocurrency mining are about to emerge. Indeed, the government is becoming increasingly interested in the issue of energy consumption. As early as 2020 in China, some measures have been taken as part of the country’s commitment to “carbon neutrality” by 2060.
The aim of these new measures is to help the Inner Mongolia region drastically reduce its energy consumption. By 2022, the region hopes to reduce its energy consumption by about 1.9%.
Officially released last week, the bill would include the closure of Bitcoin mining farms (BTC) by the end of April 2021 across the region.
Many miners are attracted to Inner Mongolia because its energy is known to be cheap. If these new measures are adopted, Bitcoin miners will have to find a new pied-à-terre to continue their business.
Inner Mongolia currently remains one of the largest regions in the world where Bitcoin mining farms are located, according to a study by the University of Cambridge.
By 2020, China alone accounted for 65% of the global hash rate of the Bitcoin network, including:
- 35.76% from the Xinjiang region;
- 9.66% from the Sichuan region;
- 8.07% from the Inner Mongolia region
What’s the future for mining in Inner Mongolia?
The issue of carbon neutrality raises questions for the cryptocurrency miners’ community. Inner Mongolia derives most of its energy from coal and this use is expected to lead to higher costs. As a result, more mining equipment should be transferred to other areas where hydroelectric power is used as the main source of electricity. This is already the case for Sichuan and Yunnan.
This remark was echoed by Colin Wu, a local journalist whose comments were shared by Edward Evenson, the director of business development at Braiins (theSlush Pool mining pool). Edward Evenson believes that miners will simply find a way to relocate and that there will be no significant impact on Bitcoin hashrate.
“It also means that a higher percentage of mining in China is likely to be done with renewable energy, as Inner Mongolian miners mainly use coal. With the rainy season starting in May, many miners from Inner Mongolia would move to Sichuan anyway at this time,”
he told Decrypt.
Miners living in Inner Mongolia have already been restricted in their activities. By 2020, subsidies to reduce electricity costs were eliminated by the local government and 21 Bitcoin mining companies had been impacted.
This is why Bitcoin price dropped recently?
In a series of videos, the successful Youtube channel CryptosRus (we are all George by the way) has suggested that there is a correlation between a massive outflow of BTC from F2pool miners and the recent Bitcoin price dropping.
THE TRUTH BEHIND F2POOL’S BITCOIN DUMPING!!! https://t.co/4ZWUOVn8qg
— CryptosRus (@CryptosR_Us) March 4, 2021
Apparently, F2pool owns mining farms in the inner Mongolia region and due to announced changes, they might be massively selling BTC before shutting down operations there, to save at least their investment in their equipment.
There has been no announcement from F2pool regarding this matter, however is somewhat understandable, as this would keep investors away.
While these are only speculations, it’s obvious that whoever is dumping big amounts of Bitcoin in the open market for whatever reason, has not affected that much the price.
HODL’ers are HODL’ing strong and buying the dips, as they learned from the past that this is the most effective strategy when it comes to Bitcoin and crypto world in general.
Photo by Marko
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