After some sideways movement the past few days, Bitcoin took an uptick after news that a region in China has banned cryptocurrency mining and declared intention of shutting all such projects by April.
The region in question is Inner Mongolia, an autonomous region that has been a favorite of the industry due to its cheap power. Famous for its inexpensive energy, this place is clustered with large coal mines that generate energy.
As a result, Inner Mongolia has attracted investment from an array of power-intensive sectors like aluminum and ferro alloy smelting and Bitcoin mining.
It accounted for 8% of the global Bitcoin mining computing power, with China overall making up 65% of the total for the network. This, of course, had to do with its appealing combination of inexpensive electricity, local chipmaking factories, and cheap labor.
But this new crackdown could change that, at least for Inner Mongolia.
The region is taking steps this year to eradicate the power-hungry practice of Bitcoin mining, and has also banned new digital coin projects. The aim being to constrain growth in energy consumption to about 1.9% in 2021.
Of course, this unnerving development comes after the top economic planner of China, the National Development and Reform Commission, blasted Inner Mongolia for being the only province to fail to control energy consumption in 2019.
It is part of the country’s long campaign to shrink down the crypto industry amid concerns over speculative bubbles, fraud, and energy waste.
This local crackdown is reviving old fears. China once was home to about 90% of trades, but Beijing ahs since 2017 clamped down on virtual currency trading and abolished initial coin offerings within its borders. Moves like this forced many exchanges overseas.
Expect similar changes to occur in Inner Mongolia too, as the region now aims to cut emissions per unit of GDP by 3% this year and control incremental growth of energy consumption.
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