China Targets Crypto Miners With Electricity Price Hike
The Chinese province of Hainan has increased the price of electricity to $0.13, equivalent to 0.8 yuan per kilowatt-hour for cryptocurrency mining operations within its region. This is an extension of actions previously taken by the Chinese central government in this direction.
It is recalled that the Chinese central government has before now levied cryptocurrency mining as an obsolete industry. This is part of ongoing efforts to clamp down on cryptocurrency activities and eliminate such practices from China.
Several approaches have been adopted by the Chinese authorities to pursue their goal of clearing the state of Bitcoin and cryptocurrency activities. Outright bans that have led to regulatory enforcements have forced many crypto practitioners to either shut down or relocate their businesses out of the country.
This time around, a different approach has been adopted, which is making it very expensive to practice in the crypto space via huge electricity tariffs. Perhaps, this could make the venture unprofitable and frustrate the miners out of the region.
The impending hike in the price of electricity has been coming after the government realized that despite its hardline approach on clamping down on cryptocurrencies, several practitioners still evaded those measures. Hence, the government warned of an upcoming and inevitable increase in the price of electricity.
The earlier warning was directed to state-owned entities that were secretly involved in cryptocurrency mining activities. The warning was a signal for them to quit, or be forced to pay the exorbitant prices, plus other consequences that they would face if they are caught.
Following the warning, the spokesperson of China’s National Development and Reform Commission (NDRC), Meng Wei had declared that the government’s intention to follow through on the shutdown process, with priority on industrial-scale Bitcoin mining, along with the crackdown on state-owned establishments that are found to be involved in such practice.
Two of the reasons given by the Chinese government for its fight against cryptocurrency mining were reiterated by Wei, which include high electricity consumption and carbon emission. According to the Chinese authorities, cryptocurrency mining remains an extremely harmful practice that threatens to jeopardize the country’s Carbon Neutral ambitions.
The province of Hainan became one of the earliest regions to implement the electricity hike policy. Part of its focus, as is with the rest of the regions, is to fish out government employees who use the infrastructure available to them to engage in the already banned exercise.
According to reports, several government employees appear to be involved in this illegal practice, and the government has begun investigations to fish out such employees and punish them appropriately. Practices like this reflect the zest with which China is prosecuting its target this time around.
Unlike in the previous years when the announcement of the ban did not have the necessary backup to see them through, this time around the game is different. The intentions of the authorities have been made clear and followed with visible actions, including arrests. This has led to several crypto-related businesses relocating from China to other parts of the world with more friendly cryptocurrency regulations.
So far, the government appears to be on top of the situation with its goal of crypto clearance. How sustainable this can be is yet to be seen, as fans of cryptocurrencies still believe that it is a technology that cannot be bound by geography or legislation.