Mongolia seeks to embrace cryptocurrencies and use of block chain technology
Interest in cryptocurrencies and blockchain has spiked worldwide and Mongolia has been no exception. Several conferences and conventions including ones supported by the government have been organized in an effort to reach a consensus on cryptocurrencies and its role in Mongolia.
The latest conference was the meeting of the Asian Cryptocurrency and Blockchain Enterprises Association in Ulaanbaatar organized on March 20. Former Mongolian sumo wrestler D.Batbayar, known as Kyokushuzan, was elected as the president of the association.
TOS token, originating in Japan, was a major topic of the conference. A seminar specifically on the implementation of TOS was organized at the conference. TOS is a digital token, marketing itself as one of the only that will be used in real commercial transactions.
“For the last few years, many different types of digital tokens have been issued globally, but most of them are not practical in real financial transaction. They are only traded in digital currency exchanges. This means that those digital tokens are no different than private collections like old stamps, antiques or jewelry,” TOS states on its website.
Creators of TOS want the token to replace all payment systems including cash and credit or debit cards and become an intelligent payment method.
“The experts from various different Asian countries have convened in Ulaanbaatar and decided to appoint me as the president of the association. TOS coin is a new type of cryptocurrency. Large Asian corporations such as Toyota, Samsung, and Hyundai all have invested in TOS. Mongolia has an abundance of energy and a vast reserve of brown coal. Therefore, it is a perfect place to breed the development of blockchain technology,” said Kyokushuzan.
Other Mongolian companies such as Sourceland LLC have popped up on the scene to take advantage of the rapid development of cryptocurrencies.
“There is a huge potential for Mongolia to seize an opportunity to host big players in the cryptocurrency industry and become a crucial service provider,” said B.Tsolmon, CEO of Sourceland LLC told China Economic Review.
The company initiated a project called GOBI — standing for Global Operation for the Bit Industry — to build enormous cryptocurrency mining facilities, crypto exchanges and data centers in southern Mongolia to host thousands of miners and entrepreneurs in blockchain technology from all around the world.
The company signed a contract with BW, one of Chinese largest crypto mining companies. Songxiu Hua, CEO of BW, confirmed that the company had made a deal worth 500 million USD and launched a pilot project in Mongolia to deliver 300,000 crypto mining machines in the first phase.
Mongolia is looking to take advantage of the uncertainty gripping the cryptocurrency industry in China. Until last year, China was by far the world’s largest market for both crypto mining and trading, but in September, the Chinese government turned decisively against the industry, banning initial coin offerings (ICOs) and digital currency exchanges. Crypto miners are also being encouraged by local governments to leave China.
Many of China’s crypto miners are therefore looking to move their operations elsewhere, and many are turning their heads toward Mongolia.
Some entrepreneurs in Mongolia are already cashing in. Gobilink. com, a company that provides hosting services to miners in Mongolia, claims to have received dozens of offers in recent months.
“Every week, we are approached by different Chinese miners wishing to move thousands of machines to our facilities,” said CEO Rene Villeneuve. “The biggest challenge is the amount of electricity needed, but we can handle most of what we’re seeing and we’re receiving great local support.”
Project developer B.Tsolmon agreed that “it might be harder at the beginning to attract FDI into the energy sector, in particular to build power plants; but I believe in the long-run all parties would benefit from this win-win cooperation.”
N.Uchral, a member of Parliament, told the China Economic Review that hosting crypto miners and founding farms in the southern Gobi region would be the solution for a country like Mongolia to reduce its overexposure to mineral resources, on which hinges almost 23 percent of GDP. The country has been suffering through an economic crisis which brought it to the brink of default in 2016 after a brief stint as one of the world leaders in economic growth in 2012.
“Our focus has always been to find ways of diversifying the economy. If China bans crypto mining operations, Mongolia should embrace it,” he said.
“I assume that what those miners want from the government is not regulation, but support for energy supply. Needless to say that there is a demand for power plants. It would help increase employment and income levels,” he added.