China Says It Wants to Eliminate Crypto Mining
China’s authority has classified cryptocurrency mining as the industry that shall be eliminated immediately, a sign of growing government pressure on the cryptocurrency sector.
China, a good fit for cryptocurrency mining with cheap electricity and land available in remote areas, has been doing its best to drive cryptocurrency out of its territory for the risk of crypto speculation and concern about energy usage.
The country’s National Development and Reform Commission (NDRC) on Monday released the 2019 Directory Catalogue on Readjustment of Industrial Structure (draft version), in which industries within the country fall into three classification it wants to encourage, restrict and eliminate. Crypto mining is among the over 450 activities to be eliminated as they do not adhere to relevant laws and regulations, were unsafe, resource-wasteful or pollute the environment.
The NDRC is now seeking public opinions on the draft and the public has until May 7 to comment on it.
Not the first time to ban crypto mining
It is not the first time regulators in China take a rigid stance on crypto mining. In January last year, the country has been planning to shut down bitcoin mines, with the top internet finance regulator requesting local governments to make an orderly exit from the industry and report work progress regularly.
While it seems the order from local governments was not followed through. In recent months, Chinese miners have reportedly deployed millions of mining rigs in Yunnan and Sichuan to take advantage of the cheaper hydropower promised in the upcoming wet season.
This time, the ban on crypto mining is released by the country’s top economic planning body, which negates the legitimacy and possibility of energy-hungry crypto mining activities in regulations from the perspective of waste of resources and environmental pollution.
Bitcoin mining not environmental friendly?
Bitcoin’s current estimated annual electricity consumption stands at 54.27 TWh, that’s the equivalent of 0.24% of total global electricity consumption, according to Digiconomist’s Bitcoin Energy Consumption Index. If bitcoin was a country, it would rank 48th, close to Bangladesh, in terms of energy consumption by country in the world. Regarding CO2 emission, the firm estimates the carbon footprint of a single bitcoin transaction is 118 kilograms of CO2, about the same as driving a car 500 miles.
However, in places where hydropower is overabundant, that’s the other way around. BTC.top CEO Jiang Zhuo’er comments on it that
bitcoin mining is a great industry that can turn water surplus in Sichuan and Yunnan into dollars without pollution and the export of bitcoin can increase the country’s foreign exchange income; In addition, crypto mining could create lots of employment opportunities in fields like chip design, mining machine production, transportation, operation, maintenance, power supply, etc., as well as increase the income of these mining concentrated regions where people are living in poverty.
Chinese bitcoin miners ready for that?
If the ban is enacted, experts say the whole elimination process will take at least three years. According to rules enacted by China’s cabinet in 2015, during the elimination period of those unwanted industries, authorities are allowed to raise electricity prices for relevant businesses to force them to close; The manufacturing, sale, and use of products in the eliminated categories are also prohibited. It remains to be seen whether the ban this time would be fully enacted or have any effect on those existing crypto mines.
While crypto miners have already been prepared to combat this – some crypto companies have moved operations to mining-favorable countries like U.S. and Canada; on the other hand, bitcoin miners have been prudent. It was reported that some mining farms in Sichuan still have a big surplus of miner slots though the long-awaited rainy season is around the corner.
The ban on crypto mining came at a time when bitcoin saw a surge in its price in the past week. As of press time, bitcoin is trading at$5,202 per coin, decreasing by 0.78% over the last 24 hours.