The government of Inner Mongolia has ordered a halt to the construction of new cryptocurrency mining projects, and has vowed to shut down all existing mining farms by the end of April, as part of an initiative to achieve energy-saving goals associated with China’s 14th five-year plan.
A draft policy posted to the Inner Mongolia Development and Reform Commission’s website on February 25 revealed the autonomous region’s ambitions to cut down on energy consumption, and categorized cryptocurrency mining as an industry exhibiting “outmoded and excess capacity”.
The regional authority also plans in 2021 to reduce energy intensity – the amount of energy used per unit of GDP – by 3% from 2020 levels, and cap annual energy consumption growth at 1.9%.
“(Inner Mongolia) will ensure that the task of controlling energy consumption is fulfilled, step up the pace of high-quality development, and facilitate an eco-friendly civilization,” said the draft rule, emphasizing that the region will implement the targets throughout all economic and social aspects.
Released weeks after Beijing scolded Inner Mongolia for being the only province that failed to meet energy-saving targets in 2019, the draft plan is still subject to change while authorities continue to solicit public opinions through Wednesday.
Brimming with coal, Inner Mongolia provides low-priced electricity and has attracted clumps of Bitcoin miners who use high-powered computers to solve sophisticated mathematical problems that serve as the basis for the currency. The power-hungry operations consume more electricity annually than entire countries such as Ukraine and Argentina, according to the Bitcoin Electricity Consumption Index of Cambridge University. Relying on its inexpensive energy, Inner Mongolia accounts for around 8% of global Bitcoin mining computing power.
While China has sought to embrace the blockchain technology that underpins the Bitcoin network, it has also taken steps to crack down on cryptocurrencies themselves. In 2017, China banned initial coin offerings, a method for start-ups to raise funds by issuing digital tokens. The government also blocked access to all domestic and foreign cryptocurrency exchanges in the same year.
Meanwhile, China is promoting a vision for a greener economy. President Xi Jinping pledged last year that China would achieve peak emissions by 2030 and carbon neutrality by 2060. The country has lowered carbon intensity by 18.8% in the five years through 2020, a Ministry of Ecology and Environment report said on Tuesday. Inner Mongolia’s move is regarded as part of China’s nationwide campaign to eliminate energy-intensive industries.