China bitcoin mining: Huobi suspends domestic bitcoin mining amid global sell-off, wider Beijing scrutiny

Cryptocurrency exchange Huobi has suspended bitcoin mining services and sales of mining equipment in mainland China, becoming one of the first Chinese-founded platforms to do so, as the price of bitcoin continues to fall after the central government announced a crackdown.

“In order to be more focused on the expansion of our overseas presence, we will currently suspend provision of related services for new users in mainland China. For existing users, updated information and details will be announced shortly,” a spokeswoman at Huobi said in a statement to the South China Morning Post on Monday.

While Huobi’s hosting services on its mining cloud platform have been suspended, the mining pool it manages, Huobi.pool, continues normal operations, the company said in a separate notice posted to its chat group on Chinese messaging app QQ.

The government, which has banned financial transactions of bitcoin and other tokens since 2019, had turned a blind eye towards the cryptocurrency mining farms in Inner Mongolia, Sichuan, Xinjiang and other mainland locations until now.

China will “crack down on bitcoin mining and trading behaviour, and resolutely prevent the transfer of individual risks to the society”, according to a statement last Friday by the State Council’s Financial Stability and Development Committee chaired by Vice-Premier Liu He, the president‘s top representative on economic and financial matters.

That statement came three days after Chinese state-backed financial associations jointly issued a warning about the risks stemming from volatile cryptocurrencies.

Bitcoin, the world‘s largest cryptocurrency, has recently suffered a major global sell-off. By Monday noon, its price fell 6.4 per cent in the past 24 hours to US$34,900, nearly half its highest price this year of US$64,895 on April 14.

Bitcoin prices have been under pressure since Tesla’s chief executive Elon Musk said earlier this month that the company would no longer accept the currency as payment.

Huobi.pool is currently the world’s eighth largest mining pool by hash rate – a measurement of computational power used in a mining network, according to data from BTC.com, a site owned by bitcoin mining company Bitmain that tracks the performance of cryptocurrencies.

Bitcoin, like many cryptocurrencies, relies on a decentralised network of computers dedicated to verifying and recording transactions. In exchange for the processing power and electricity used in this process, owners of the computers are rewarded with new tokens via a process called “mining.”

A mining pool is a group of computers operated by different miners that share processing power to verify and record the same transaction and share the reward. Often pools are made up of first- and third-party mining computers.

China’s bitcoin mines could derail carbon neutrality goals, study says

Beijing-based Bitmain Technologies, one of the first companies specialising in bitcoin mining, manages the largest pool in the world, accounting for around 17 per cent of the global bitcoin hash rate, according to data from BTC.com

China is the world‘s largest cryptocurrency mining location, accounting for 65 per cent of the global bitcoin hash rate, according to estimates by the Cambridge Bitcoin Electricity Consumption Index, with energy consumption expected to peak in 2024 at 297 terawatt-hours, more than the energy used by Italy’s entire population in 2016.

An analysis by Cambridge University in February estimated that the industry consumed about 121 terawatt-hours a year, or nearly 0.5 per cent of the world’s energy production.