Why it matters: Inner Mongolia’s municipal-level governments in recent years have looked to cryptocurrency mining as an opportunity to transform its less-developed economy.

Some mining operations have established partnerships with local governments to gain access to cheap power. However, there are still many small-scale, illicit mining operations in China that are flying under the radar.
Regulators previously proposed phasing out crypto mining, however, the actual process for implementation remains largely ambiguous. Some industry watchers doubt that the move will have a substantial impact.

Details: Five departments of Inner Mongolia’s provincial-level government including the Financial Office, Development and Reform Commission, the Office of the Ministry of Industry, the Big Data Bureau, and the Public Security Department issued a notice stating that the cryptocurrency mining industry is a pseudo-financial innovation irrelevant to the real economy, and therefore should not be supported.

The plan to clear out the mining industry from the province will take place in two phases. The first phase is self-examination and self-reporting, which takes place in September. The second phase will be implemented in October, during which authorities will carry out the supervision and rectification work.
Context: A majority of the world’s cryptocurrency mining activity is concentrated in China because of its abundance of cheap electricity. The coal-rich Inner Mongolia is an area that crypto miners prefer to set up shop. Other provinces including southwestern Sichuan and Yunnan with inexpensive hydroelectric power are also popular destinations.

In April, the National Development and Reform Commission proposed to phase out Bitcoin mining, a move that could have a serious impact since Chinese mining pools account for a majority of Bitcoin’s hash power.
The country has ousted much of cryptocurrency activities including initial coin offerings (ICOs) and exchange services. However, China’s attitude towards mining activities remains ambiguous and no outright ban has yet been entered into law.
Authorities for Ordos, a city in Inner Mongolia, offer Bitmain, a major Chinese cryptocurrency mining rig seller, special pricing on electricity 30% cheaper than rates that other industrial companies in the area pay.