A NY Times report on Bitmain’s mining farm in Inner Mongolia was reposted by Chinese mainstream media when the countries authorities are squeezing out the living space of Bitcoin exchanges. Will Bitcoin mining farm be the next target? Such pubic exposure is the last thing that the mining farm operators wanted amid the regulatory storm. After the Xinjiang authority issued a document warning the risk of Bitcoin mining farm, the Dalat Economic Development Zone of Erdos City, Inner Mongolia, where one of Bitmain’s largest mining farm is situated, denies local Bitcoin trading.

Bitmain’s mining farm in Inner Mongolia. Source:NY Times

The official response is:

“Prior to BTCChina’s suspension of new user on 18 September, local authority has conducted inspection on the Bitcoin Mining Center’s potential breaching of current policies. The enterprises business scope is mainly the operation, stocking, maintenance and consigning of Bitcoin mining machines and is not involved in Bitcoin trading. So far, situation like abnormal production and personnel changes has not been detected with the enterprise.”

Qi Aijun, Director of the Dalat Economic Development Zone of Erdos City, said:

“It’s not the fact. Bitcoin mining farm is doing cloud computing work for a Beijing-based company. The enterprise in the economic development zone is only responsible for maintenance for the machines.”

Erdos was best known to Chinese for its enormous reserve of coal. On it golden time, housing price was blown to 20,000 yuan one square meter. But with the coal price plummeted from 2012 to 2016, the bubble burst. Lots of industrial park were deserted. Bitcoin mining farm is the fresh blood of local economy. It’s reported the bitcoin minning plant consume 40 megawatts of electricity an hour, equivalent to the demand of 12,000 households over the same period.

According to Sina, 7 out of the 8 150m long mining plants host 21,000 units for Bitcoin mining, and the other plant has 4,000 units for Litecoin mining.

Inside the mining farm source:Sina

It’s both a political and economic task for Chinese authority to attract investment so as to generate tax revenue locally. A bitcoin mining farm consumes power and generates some heat and noise. It is usually considered as a clean business as long as it is not situated in a neighborhood. Therefore most of the bitcoin mining farms are built in remote China where energy is abundant. However when the direction of wind shifts, local authority try to cut off connections to the tainted project.

Will the internet access of such mining facilities be cut off and caused a sudden hashrate cliff? My best guess is that it won’t happen. Basically, the execution of policies relies on the delicate handling of inter-relationship of local entities. The official statement is considered a “safe for now” flag for the mining farm but we need to wait to see how things evolve.