Crypto-miners halt business in China after government cracks down
Crypto-miners have shut down their business operations in China. This is consequent to China’s intensified crackdown on bitcoin mining, trading, and rising popularity of cryptocurrencies and the crypto mining industry.
To reduce financial risks, a State Council committee led by Vice Premier Liu announced the crackdown late on Friday. It was the first time the council has targeted virtual currency mining, a big business in China that accounts for as much as 70% of the world’s crypto supply.
On Monday, Huobi, a cryptocurrency exchange, announced that it will no longer provide crypto-mining or trading services to mainland Chinese customers, instead will focus on international enterprises.
Citing regulatory concerns, BTC.TOP, a cryptocurrency mining pool, also announced the suspension of its operations in China. While HashCow, a bitcoin miner, also said that it will stop purchasing new bitcoin rigs.
Excess power consumption and monetary frauds
Crypto miners validate bitcoin transactions with more powerful, specially designed computer equipment, or rigs, in a process that also generates newly minted bitcoin for them.
President Xi Jinping of China has committed to achieving carbon neutrality by 2060. The prohibition on mining appears to be following this commitment. According to a study recently published in Nature Communications, the annual energy consumption of China’s crypto miners is predicted to peak in 2024 at around 297 terawatt-hours, which is more than all of Italy’s electricity usage in 2016.
The crackdown is part of China’s stepped-up campaign to combat speculative cryptocurrency trading. Bitcoin has taken a beating as a result of China’s new decision and is now down over 50% from its all-time high. Ether, on the other hand, dropped to a two-month low on Sunday, down 60% from a record high reached just 12 days ago.
China has already lost its position as a global cryptocurrency trading hub after the 2013 ban on handling Bitcoin, and 2017 ban on initial coin offerings.
(Update: 28th May, 2021): Following the crackdown on the crypto mining industries, regulators in China’s Sichuan region are accumulating data on cryptocurrency mining. This may lead to a full-fledged crackdown.
According to an official, energy regulators in China’s Sichuan province will meet with local power companies to gather information on cryptocurrency mining
On June 2, a conference for Sichuanese officials is also scheduled to discuss crypto mining.
Do subscribe to our Telegram channel for more resources and discussions on technology law and news. To receive weekly updates, don’t forget to subscribe to our Newsletter.
You can also follow us on Instagram, Facebook, LinkedIn, and Twitter for frequent updates and news flashes about #technologylaw.