Bitcoin mining set to wane in China as green concerns and financial risks see Beijing ramp up the pressure

Name: Cryptocurrency volatility highlighted by China’s recent crackdown and Elon Musk comments
Uploaded: 2021-05-25T22:00:21.000Z
Duration: 2 min 27 s
Description: Cryptocurrency volatility highlighted by China’s recent crackdown and Elon Musk comments

Beijing is ramping up the pressure on bitcoin miners amid growing green ambitions and rising concerns over the financial risks posed by cryptocurrencies

Cryptocurrency mining operations have already been targeted by a number of Chinese municipal and provincial governments, and pressure set to intensify

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The mining of bitcoin requires massive amounts of electricity to run the large computer server arrays needed to do the complex calculations required for cryptocurrency transactions. Photo: Bloomberg

Yujie Xuein Shenzhen

Published: 6:00am, 26 May 2021Updated: 1:58pm, 26 May 2021

Corrected [1:58pm, 26 May, 2021]

[1:58pm, 26 May, 2021]
The original version of this article reported that creation and trade of cryptocurrencies were made illegal in 2019 when it was, in fact, 2017.

China’s place at the centre of global bitcoin mining is fading as Beijing ramps up the pressure on heavy energy-use practices amid growing green ambitions and rising concerns over the financial risks posed by cryptocurrencies, according to experts.

“We are seeing the cryptocurrency market enter a path to ‘de-China-isation’ – first on trading and now on computing power, based on a series of stronger steps taken against cryptocurrencies and bitcoin mining last week by Beijing,” said Wang Juan, associate professor on blockchain at Xi’an Jiaotong University and a member of the OECD Blockchain Expert Policy Advisory Board.

Although the creation and trading of cryptocurrencies like bitcoin has been illegal in China since 2017, pushing exchanges like Binance, Huobi, and OkEx offshore, the government has, up until recently, turned a blind eye to the country’s bitcoin miners – companies and individuals that operate the computers that make up bitcoin’s decentralised network.

However, bitcoin mining requires large amounts of electric power, and with China setting a bold target of achieving carbon neutrality by 2060, historical tolerance for these mining operations is fading fast. Bitcoin miners currently take advantage of cheap, coal-powered electricity in places like Inner Mongolia, Sichuan and Xinjiang.

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Cryptocurrency volatility highlighted by China’s recent crackdown and Elon Musk comments

China currently accounts for about 65 per cent of the bitcoin hash rate, a measure of the processing power used by the bitcoin network to verify transactions and mine new tokens of the cryptocurrency, according to estimates by Cambridge Bitcoin Electricity Consumption Index (CBECI).