Mongolia emerges as crypto mining hub www.asia.nikkei.com

TOKYO -- Mongolia has become a cryptocurrency mining hub as companies reeling from the 2018 bitcoin crash find opportunities in a country that offers favorable conditions of cheap electricity and cold weather.

At an underground structure at a condominium complex in the capital city of Ulaanbaatar, a shelf full of crypto mining equipment was recently seen growling as it engaged in constant computing of virtual currency transactions to generate profit.

This is one of the two locations out of which Tokyo-based e-wallet company Ginco operates in the city. The company launched the business in October and runs about 600 mining computers; it plans to add 1,000 units in early 2019.

"The business environment is increasingly harsh, but we can still produce a profit," said Yuma Furubayashi, CEO of Ginco Mongol. Energy cost is a key factor in the profit equation of crypto mining. Electricity prices in Mongolia run around a third of Japanese rates and lower than in China, which has been home to many crypto miners.

The landlocked nation's cold weather also helps by cooling the heat-generating mining computers.

Mongolia is one of the few countries where bitcoin miners can still generate a profit, along with the U.S. and Sweden, according to Ginco. Following a crash in the second half of 2018, the virtual currency's price has declined to a fifth of the peak it reached in December 2017.

Many big crypto mining companies have shut down their operations. But "bitcoin, which has become synonymous with virtual currency, will always hold value," says Hiroyuki Maruno, a manager at Tokyo-based consultancy LayerX.

Mongolian information technology company iTools began bitcoin mining last summer using the site of a former construction materials factory. The facility, located in the city of Darkhan, north of the capital, gets electricity from its own generating facilities.

Tokyo-based online ad company Unimedia outsources operation of mining equipment to iTools.

The languishing virtual currency market has put the brakes on iTools' plan to expand its fleet of mining equipment. But CEO Tamir Bayarsaikhan stresses that the business enables the company to deepen its expertise in blockchain technologies.

The technology, known for high levels of security, has broad applications, including data management. The Mongolian company hopes to leverage its blockchain-related operations to create new business.

Crypto mining is an attractive year-around business for companies in Mongolia, whose core industries like mineral mining, agriculture and tourism slow down during the harsh winter. The government is actively nurturing the country's information technology sector.

The leasing unit of Trade and Development Bank of Mongolia has joined with Ginco in plans to add crypto mining to its fleet of leased equipment, along with mineral mining and farming machinery.

Mongolia's economic development has historically been driven by resources like coal and copper. Can crypto miners strike gold? It will probably take some time to find out.

Sea buckthorn factory to be built www.montsame.mn

Ulaanbaatar /MONTSAME/ The Government’s commitment to supply the population with nutritious fruits and berries by increasing their varieties and production, establish a consolidated sea buckthorn production network and increase the export revenues is reflected in its Action Plan for 2016-2020.

Russia-China trade turnover hits record $100 billion www.rt.com

The volume of mutual trade between Russia and China finally reached $100 billion for the first time ever, according to Gao Feng, the Chinese commerce ministry's spokesman.
The official said that the trade turnover hit the all-time high in the middle of December, 2018. Feng added that Russia was China’s major partner when it comes to trade growth dynamics.

Higher gold royalty poses threat to FX reserves www.zgm.mn

Due to consecutive failure to form the quorum, the Parliament has delayed its plenary sessions for two months. One of the key items on the order list was a bill on extending 2.5 percent gold royalty for another three years, which was supposed to be ratified before the turn of the year. Thus, gold tax will now be set at pre-revision level at 5-10 percent, depending on the global price of gold.

Frontclear facilitates a transaction with Development Bank of Mongolia and Societe Generale www.montsame.mn

Ulaanbaatar/MONTSAME/ Frontclear arranged and structured back-to-back USD/JPY cross-border cross currency swap transactions for the value of USD 30 million with Societe Generale and Development Bank of Mongolia.

Terra launches Mongolia’s first ever blockchain payment system www.leaprate.com

Terra, the blockchain company building a payment system powered by its stablecoin, has just announced that it has teamed up with Mongolia’s capital city of Ulaanbaatar.

Anti-corruption protests held in Mongolia again www.akipress.com

Another protest action started in Ulaanbaatar main square on January 10 against speaker of parliament Miyegombyn Enkhbold and other members of the Mongolian People's Party (Mongol Ardiin Nam) and the Democratic Party (Ardchilsan Nam), together known by the abbreviation MANAN.

Fall of Mongolian Tugrik against US Dollar continues www.news.mn

According to the Central Bank of Mongolia’s exchange rates published on 10 January, the Mongolian tugrik stood at MNT 2,666.36 against the US dollar; this represents a fall of MNT 16 in the last four days.

Mongolian Government increases monthly allowance for students www.news.mn

The Mongolian Government has approved MNT 41 billion for monthly allowances for students in the 2019 State Budget. Over 35,000 thousand students from 85 Professional Training Centers – both state-owned and private – will benefit from a total MNT 100,000 monthly allowance. The government has doubled the monthly money for supporting professional training centers and increasing the number of professional workers. Previously, the number of students studying in professional training centers decreased by 4300 at the start of the 2018-2019 academic year.

Belt and Road Inner Mongolia: Strategic Objectives and Key Deliverables www.economists-pick-research.hktdc.com

China’s Belt and Road Initiative (BRI) aims to promote economic links between countries along its routes, and integrate regional development strategies. China, Mongolia and Russia are building the China-Mongolia-Russia Economic Corridor in a bid to strengthen existing cross-border trade and investment between the three countries and turn the region into an integral part of the BRI. Inner Mongolia, a border province in northern China, acts as a bridgehead between China and its northern neighbours. It serves as a logistics centre and trade hub along the China-Mongolia-Russia Economic Corridor and plays an important role in China’s external-oriented economic development.

China-Mongolia-Russia Trade Hub

The Inner Mongolia Autonomous Region, on China’s northern border, is a major trading partner of neighbouring Mongolia and Russia. Trade with the two countries accounts for over 50% of Inner Mongolia’s import-export trade as well as a considerable share of China’s trade with both countries. Two of the region’s border cities, Erenhot and Manzhouli, are China’s largest trade hubs with Mongolia and Russia respectively.

Major Import & Export Trading Partners of Inner Mongolia, 2017
Total trade with Inner Mongolia
(US$m) Share of Inner Mongolia’s total exports (%) Share of Inner Mongolia’s exports in China’s exports to the country (%) Share of Inner Mongolia’s total imports (%) Share of Inner Mongolia’s imports in China’s imports from the country (%)
Mongolia 3,909 10.5 33.6 42.2 67.6
Russia 3,044 12.9 1.2 30.6 6.1
Australia 589
0.8 0.1 6.7 0.6
USA 539 6.8 0.1 3.3 0.2
Source: Inner Mongolia Autonomous Region Statistics Bureau, National Bureau of Statistics of China

Since Inner Mongolia’s foreign trade is mainly conducted with Mongolia and Russia, its export growth relies heavily on the economic conditions of the two countries. Between 2014 and 2016, falling commodity prices badly affected economic growth in Mongolia and Russia, which naturally led to a lacklustre performance by Inner Mongolia’s exports in that period. Inner Mongolia’s exports to Mongolia dropped by more than 40% in US dollar terms in 2016 from the year before, while its overall exports declined by 20% in the same year.

Despite being China’s base for trade with Mongolia and Russia, Inner Mongolia’s advantages as a border province have not been fully made use of. Currently its import-export trade is conducted mainly in the form of “general trade” and “small-scale border trade”.

Compared with other border provinces in the south, the share of Inner Mongolia’s total trade accounted for by processing trade using local or imported resources is relatively low. In Guangxi, for example, processing trade accounts for about 20% of its total trade; in Yunnan, the share is about 10%. In Inner Mongolia, processing trade accounts for less than 5% of its total trade. In other words, its trade structure can be improved.

In light of this, Inner Mongolia has been trying to develop its processing trade in recent years. Construction of import-export resources processing parks has begun in Erenhot and Manzhouli. Imported resources (such as wood and animal and agricultural products) are used for processing and the products are either exported to markets in Europe and America or sold domestically to other regions in China. With processing facilities in Inner Mongolia becoming better and more advanced, the potential for developing import-export processing trade in the autonomous region is vast.

China, Mongolia and Russia signed the Plan on Establishing the China-Mongolia-Russia Economic Corridor in 2016, the first multilateral co-operation plan launched under the BRI. It aims to expand tripartite trade, raise product competitiveness, improve cross-border transport, and develop infrastructure facilities. Taking advantage of its role in China-Mongolia-Russia trade, Inner Mongolia serves as a strategic nexus along the China-Mongolia-Russia Economic Corridor.

One of the key objectives in building the China-Mongolia-Russia Economic Corridor is to construct a logistics passageway crossing the three countries, which should promote tripartite trade between them. Of the seven railway routes outlined in the Plan, six will pass through Inner Mongolia. Two of the three China-Europe Railway Express (CR Express) routes connecting China with Europe leave Chinese territory via Inner Mongolia. Currently, about half of the trains running between China and Europe pass through Inner Mongolia.

In line with the objectives of the BRI, China, Mongolia and Russia are devoting resources to the construction of the Ulanqab-Ulaanbaatar-Ulan-Ude logistics channel. Comprehensive logistics parks are being built and business links strengthened to try to improve transport connections along the passageway, as well as linking the cities of Ulanqab and Ulaanbaatar in Inner Mongolia with the city of Ulan-Ude in Russia.

China, Mongolia and Russia have also prioritised working together to raise production capacity and investment, deepen economic and trade co-operation, and accelerate the synergy between China’s BRI, Russia’s Eurasian Economic Union, and Mongolia’s Prairie Road development initiatives.

As well as promoting foreign trade, Inner Mongolia is also actively pursuing the transformation and upgrade of its indigenous industries, which will help boost the BRI. With its rich energy resources, vast land size and abundant and cheap electricity, Inner Mongolia is ideal for the development of modern industries requiring high power consumption, such as cloud computing. Its climate, with its low temperatures, also offers a natural, cool environment for businesses to house their data centres at low cost.

Hohhot Shengle Modern Service Industry District is the largest cloud computing industry base in Inner Mongolia. It has put a lot of work into developing cloud computing data centres and big data projects. China’s top three telecommunications operators, China Telecom, China Mobile and China Unicom, have all established a presence in the park.

With its vast grasslands and well-developed animal husbandry industry, Inner Mongolia has also placed great emphasis on the reform, innovation and modernisation of animal husbandry. A large number of businesses in the Shengle district are engaged in collecting and analysing all kinds of data on sectors such as the dairy industry and grassland ecology. Others specialise in the ‘smart’ rearing of dairy cattle, providing services such as breeding and reproductive technologies to improve dairy cattle breeds.