Bitmain, Ebang Among 21 Bitcoin Mining Farms Stripped of Energy Perks in Inner Mongolia

Over 20 bitcoin mining farms in China's Inner Mongolia have been stripped of electricity perks after a clampdown by the local government.

A document issued by the Department of Industrial and Information Technology of the Inner Mongolia Autonomous Region on Aug. 24, obtained by CoinDesk, shows the government agency has required a local electricity trade company to disqualify 21 bitcoin mining farms from participating in energy trading.

Chinese crypto news source Wu Blockchain first reported the document, but did not provide the names of the farms on the list. Notable entities include two subsidiaries of bitcoin mining giant Bitmain in Inner Mongolia and another subsidiary of mining equipment manufacturer Ebang.

Also on the list is the Inner Mongolia Branch of China Telecom, based in the city of Ordos. That suggests the telecoms giant may also be involved in cryptocurrency mining activities in the region.

The suspension means these mining farms will no longer be able to enjoy electricity discounts that come from a liquid energy marketplace provided by the Inner Mongolia Power Group, a state-owned energy trading firm in the region.

Kevin Pan, CEO and co-founder of China-based mining pool PoolIn, said the policy will have some impact on the industry, at least in the short term. The electricity for these farms will likely rise by 0.1 yuan, or $0.014, per kilowatt-hour (kWh), he said.

The current electricity cost for mining farms in the region is around 0.26–0.28 yuan per kWh ($0.037 to $0.040). With the new policy change, the upper side of the range could reach as high as 0.38 yuan per kWh ($0.054), Pan said.

Such a seemingly negligible difference would, in fact, mean a significant increase of operational costs for energy-intensive crypto mining activities.

Read more: China’s Inner Mongolia to Shutter ‘Illegal’ Bitcoin Miners by October

If a mining farm is running at a full capacity of just 10,000 kWh, considered relatively small scale in the industry, an increase of $0.014 per kWh means the farm will incur an additional $3,360 in operational costs per day.

The document, addressed to Inner Mongolia Power Group, said the suspension notice came after the government agency conducted on-site inspections at over 30 big data and cloud computing companies in the region and discovered 21 of them are actually crypto mining farms.

The region-wide inspections started late last year, as CoinDesk reported at the time. The aim was to close down bitcoin mining operations that were without proper business registrations. They further targeted firms attempting to get electricity perks by disguising themselves as eligible entities.

According to the Bitcoin Electricity Consumption Index compiled by the Cambridge University, China had over 65% of the global bitcoin mining computing power as of April this year. Inner Mongolia accounted for 8% of the network's total at the time.