Chinese province attempts to staunch crypto mining with new hotline
By Claire Hunte
12:07, 20 May 2021
Inner Mongolia, China’s largest province in the north, has introduced a hotline for people to report suspected crypto mining in an effort to tackle high levels of energy consumption.
The measure follows on the heels of China’s latest crackdown on digital coins this week, causing cryptocurrencies to flounder for the fifth straight day, knocking 30% off bitcoin’s value on Wednesday, and dropping it to $30,101 at its lowest point. Bitcoin has since recovered its losses.
Yesterday, China issued a warning about the volatile asset class stating that virtual currencies “are not supported by any real value”. It also told financial institutions not to accept them as payments or engage in other related services, including exchange transactions. The move exerted further pressure on cryptocurrencies and comes after Elon Musk's recent tweet – which stated that Tesla would no longer accept bitcoin due to environmental concerns – initiated a collapse.
This latest crackdown by Chinese authorities is more severe compared to the tightening of regulations made in 2017 and expands the type of services that are now prohibited in the country.
Measures to halt heavy pollution from crypto mining
China's relatively cheap access to electricity means that around 70% of the world's cryptocurrency ‘hashrate’ is concentrated in China, resulting in a huge carbon footprint for the country. A recent study looking at the carbon emission flows and sustainability of Bitcoin’s blockchain operations said that its mining activity drew as much energy as one of China's top 10 cities.
The authors' claimed they investigated carbon emission flows of Bitcoin blockchain operation in China with a simulation-based Bitcoin blockchain carbon-emission model and found “that without any policy interventions, the annual energy consumption of the Bitcoin blockchain in China is expected to peak in 2024 at 296.59 Twh and generate 130.50 million metric tons of carbon emission correspondingly. Internationally, this emission output would exceed the total annualised greenhouse gas emission output of the Czech Republic and Qatar.”
Mining operations take advantage of hubs with space for data centres, low rents and temperate climates, all of which made Inner Mongolia, the world's largest coal producer, an ideal spot. One of China's five autonomous regions, it accounted for 8% of the global hashrate, prompting government officials in March this year to give the miners two months' notice to leave. The move came after Inner Mongolia exceeded carbon-emission targets set by Beijing.
Inner Mongolia has approved new coal-fired plants despite China's tighter national climate targets. The provincial government has since turned its attention to crypto mining, cancelling favourable rates it previously offered to a number of crypto mines and then, in March, giving them notice in response to pressure from Beijing to rein in energy use.
Read more: Bitcoin falls below ,000 after China ban
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