China’s bitcoin crackdown: Fourth-largest bitcoin-producing province joins the country’s moves against crypto mining

Yunnan, which ranks fourth in China in terms of bitcoin hashrate, has promised to shut down any company in violation of the new rules by the end of June
China accounts for 65 per cent of the global bitcoin hash rate, according to the Cambridge Bitcoin Electricity Consumption Index

Bitcoin

Iris Deng

Published: 3:00pm, 13 Jun 2021

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Yunnan provincial authorities issued a notice ordering an investigation into the alleged illegal use of electrical power by individuals and companies involved in bitcoin mining, according to a report by China Securities Journal on Saturday, becoming the latest region to join the country’s crackdown on the practice.

The Yunnan Energy Bureau said it would cut the power supply to anyone illegally using electricity for bitcoin mining as well as for such users that evade electricity bills, according to the report. The authorities will also shut down bitcoin mining operations that may pose a safety risk related to their electricity usage.

Yunnan, which ranks fourth in China in terms of bitcoin hashrate – a measure of the network’s computational power – has promised to shut down any company in violation of the new rules by the end of June.

Yunnan is the latest to join China’s crackdown on bitcoin mining. Inner Mongolia, Xinjiang and Qinghai have also issued notices to shut down part or all of the mines in their regions.

A small toy figurine is seen on representations of the bitcoin virtual currency displayed in front of an image of China’s flag in this illustration picture. Photo: Reuters

The provincial industry and information technology authorities in Qinghai ordered bitcoin mines to shut on Wednesday and also banned businesses like data centres, industrial parks and power stations from providing cryptocurrency-related projects with land and power, according to a notice cited by state-owned Xinhua News Agency.

The notice was issued after Chinese President Xi Jinping visited the province, where he emphasised the importance of environmental protection.

Inner Mongolia, rich in fossil fuels, started kicking out miners in February and had shut down 35 bitcoin mining companies by the end of April. Officials in Sichuan province, which relies on hydropower, held a meeting on bitcoin mining earlier this month, but did not come to any conclusions about possible policy changes.

Yunnan, which is also reliant on cleaner energy, is the second-largest hydro-power-producing province in China.

The move by Yunnan comes amid Beijing’s continued crackdown on bitcoin mining and cryptocurrency. The State Council’s Financial Stability and Development Committee targeted bitcoin mining enterprises for the first time last month, saying it would “crack down on bitcoin mining … and resolutely prevent the transfer of individual risks to the society”.

China accounts for 65 per cent of the global bitcoin hash rate, according to the Cambridge Bitcoin Electricity Consumption Index (CBECI). Xinjiang alone accounts for nearly 36 per cent of that, with Sichuan and Inner Mongolia second and third, respectively. Yunnan ranks fourth, accounting for 5.42 per cent of the global hash rate.

Mining bitcoin uses about 111.5 terawatt-hours a year, according to the latest estimate from CBECI, more than the total annual energy used by the Netherlands. The heavy consumption of bitcoin mining clashes with China’s vow to reduce carbon dioxide emissions by at least 65 per cent by 2030, relative to 2005 levels, and then achieve carbon neutrality by 2060.