China Digs Into Cryptocurrency: Mining Banned In Energy Revamp
Beijing has intensified its efforts to curb cryptocurrency mining, citing its excessive energy consumption and potential environmental harm. This move comes as part of a broader plan to achieve “higher level and higher quality” energy conservation, aligning with China’s national goals of pollution reduction and carbon neutrality.
China Targets Cryptocurrency Mining: Stricter Measures
The updated implementation plan, released by the Beijing Municipal Development and Reform Commission alongside 11 other departments, specifically targets “virtual currency ‘mining’ activities” under item 18. Authorities will bolster monitoring and enforce stricter classification and rectification measures to “resolutely clean up” such operations.
This targeted approach differs from China’s blanket ban on cryptocurrency trading and mining implemented in 2021. However, analysts warn that it could still push mining operations underground or offshore, potentially hindering complete eradication.
Following the initial ban, many Bitcoin mining operations relocated to the United States, highlighting the interconnectedness of this global industry.
Beijing, China, requires strengthening the monitoring and analysis of cryptocurrency mining activities in 2024 and resolutely cracking down on cryptocurrency-related mining activities in Beijing in accordance with laws and regulations. https://t.co/uY6eUTc3Vx
— Wu Blockchain (@WuBlockchain) February 4, 2024
Meanwhile, the United States is also taking a closer look at the environmental impact of cryptocurrency mining. The Energy Information Administration (EIA), under the White House Office of Management and Budget, is launching a new initiative to collect data on the energy use of commercial crypto miners.
This program aims to understand the sector’s footprint on the national energy landscape and inform future regulations or policies.
Total crypto market cap at $1.605 trillion on the daily chart: TradingView.com
This move reflects growing concerns about the ecological impact of cryptocurrency mining. While the exact energy consumption varies depending on factors like mining equipment and energy sources, a 2022 study by the University of Cambridge estimated Bitcoin mining alone consumes roughly 121 Terawatt-hours (TWh) of electricity per year, comparable to the annual electricity consumption of Argentina.
Source: Beijing.gov.cn
Crypto Crackdowns: Balancing Growth And Sustainability
Experts acknowledge the potential economic and social consequences of these crackdowns. China’s cryptocurrency industry, once a global leader, has seen significant decline since the 2021 ban.
Similar restrictions in other countries could further limit its growth and impact businesses and individuals involved in the industry.
However, the environmental argument holds significant weight. Sustainable alternatives are being explored within the blockchain space, including proof-of-stake protocols that require significantly less energy compared to traditional proof-of-work models used in Bitcoin mining.
Technological advancements and innovative solutions are crucial to reconcile the potential of blockchain technology with environmental responsibility.
The evolving regulatory landscape surrounding cryptocurrency mining highlights the complex interplay between financial innovation, environmental sustainability, and government policy.
As this industry continues to develop, finding a balance between technological progress and environmental responsibility will be a critical challenge for governments, industry players, and the global community alike.
Featured image from Adobe Stock, chart from TradingView
