China’s largest bitcoin-producing provinces have intensified the crackdown on cryptocurrency extraction in the latest sign of how global authorities are strengthening their position on the rapidly growing digital asset markets.
The country’s bitcoin mining operations, the power-hungry process of solving computational puzzles that create new virtual currency units, have been in retreat since May when the government confirmed a ban on cryptocurrency transactions and warned of the risks of using them for payments. Bitcoin prices have fallen after the announcement and are currently trading at about $ 30,000 below the April peak of nearly $ 65,000.
China’s latest intervention puts more pressure on what was once one of the world’s most vibrant markets for trade and digital currency mining. It comes at a time when many governments are examining the industry’s impact on the environment and determining the types of financial surveillance that should be applied to cryptocurrencies.
Earlier this month, global regulators called for digital currencies to carry the hardest banking capital rules of any assets, with the Basel Committee on Banking Supervision warning that the growing use of cryptocurrencies “has the potential to raise concerns about financial stability”.
A wave of despair has hit China’s cryptocurrency mining community this week after officials followed in all of China’s hubs for mining operations. Inner Mongolia and has released further measures aimed at bitcoin creators. The northern region had banned mining and introduced a telephone line to report suspected May operations.
Sichuan, a province rich in hydroelectric power in southwest China, has ordered the 26 largest local mines to stop working after an investigation is conducted, following a series of meetings by the Energy Bureau of China. the local Development and Reform Commission, Chinese media reported Friday.
The probe, which will run until June 25, was taken as a warning by several bitcoin miners that it was time to pack up and transfer it out of China.
A video of employees at a large mine shutting down computer servers seemed to capture the sense of purpose and it was widely shared by fans of Chinese cryptocurrencies online.
Due to its abundant supply of renewable energy from a vast network of dams, Sichuan had been considered a place of last resort for mining operations driven out of the provinces that rely on coal-fired power plants for electricity.
Governments in major cryptocurrency mining sites Xinjiang, Yunnan and Qinghai also announced this month plans to close mining operations.
Local governments are under pressure from Beijing to reduce energy intensity – carbon dioxide emissions per unit of gross domestic product – that China aims to reach maximum greenhouse gas production by 2030 and achieve “carbon neutrality»In 2060.
Analysts have regularly reported that managing the computers needed for bitcoin production is bad for the environment. The Cambridge University’s Bitcoin Electricity Consumption Index suggests that bitcoin extraction consumes 133.68 terawatt hours per year of electricity, more than Sweden did last year.
Proponents of crypto mining, however, say that at least some of the energy used comes from clean sources, some of which could otherwise be exploited because they are in areas outside of typical energy networks.
Despite measures in 2017 and 2019 to curb bitcoin trade and investment, China has remained the world’s leading hub for bitcoin creation and accounted for up to 75 percent of global mining, according to pre-repression estimates. .
Guan Dabo, an economist at Beijing’s Tsinghua University and author of a study estimating the contribution of bitcoin mining to China’s carbon emissions, said the reassignment of miners to a location with an electricity supply cleaner had always worked only as a temporary compromise.
“[Bitcoin mining] it does no good to national economic development or social development, “he said.” On the other hand, it consumes a lot of electricity that could be used for other purposes, especially at a time when the provinces are lack of electricity. ”