Understanding the Chinese Crypto Crackdown

Chinese Crypto Crackdown

Digging deeper into the reasons behind China’s crypto regulation policies

In the latest addition to China’s cryptocurrency crackdown, the government of Sichuan province halted all crypto mining activities in the region. The efforts to restrict cryptocurrency mining have also spread to China’s northwestern province of Hebei. The cyberspace commission of Hebei announced on September 14, 2021 that it will cooperate with the central government’s efforts to curb crypto mining and trading.

Other provinces like Anhui and Gansu have also announced plans to restrict crypto mining. Inner Mongolia has gone a step ahead and even set up a hotline and email address where the general public can report crypto mining operations. 

Banks in the country have now been instructed not to provide services such as trading, clearing and settling Bitcoin transactions. Alipay, the payment platform owned by Ant Group, made a statement in June that it would set up a monitoring system to track illegal cryptocurrency transactions.

The Chinese crypto crackdown stems from a need to meet environmental goals. Let’s try to understand why crypto mining is bad for the environment and how the Chinese regulation will impact the crypto mining business.

China’s energy efficiency mission

China hosts around 75% of the world’s Bitcoin mining capacity. This is due to the country’s pre-existing technology supply chains and extremely cheap electricity rates. In 2021, the Bitcoin mining industry accounts for approximately 5.41% of China’s carbon emissions due to electricity generation. The country has thus been on a mission to crack down on crypto mining. 

China wants its CO2 emissions to peak by 2030 so that it can become carbon-neutral by 2060. The energy requirements of Bitcoin-mining have become a hindrance to this goal. 

The impact of China’s crypto regulation

With China’s swift decision-making, 90% of the country’s Bitcoin mining capacity has now been shut down. The cryptocurrency lost more than 20% of its value weeks after the shutdown was instated in late June. After peaking at US$65,000 in April, Bitcoin’s value nosedived to US$33,333 soon after the crackdown began.

While the value of Bitcoin might have fallen, the crypto crackdown in China could possibly make mining much easier on a global scale. The total Bitcoin hash rate or power requirement went down from a record of 180.7 million terahashes (the unit used to measure the speed of crypto mining hardware) per second in mid-May, to around 116.2 million in late June after the crackdown began.

These are just the short-term effects of the crackdown. The long-term problem that emerges from this scenario is that the miners will leave China and move to countries where they can access cheap electricity. While China’s Bitcoin mining capital Sichuan at least partly relies on hydroelectric power, the same is not true for the regions these miners are moving towards. One such region is Kazakhstan. The country’s coal mines provide a cheap and abundant energy supply. With miners moving towards countries that rely on fossil fuels for electricity generation, this might end up impacting the environment more in the future.

Image courtesy of Creative Commons

SHARE THIS STORY

Share on facebook
Share on twitter
Share on linkedin
Share on email

RELATED POSTS

How Can Entrepreneurs Overcome Loneliness?

How Can Entrepreneurs Overcome Loneliness?

Starting your own business is a project that will take over most of your life. You are straying away from the typical 9-5 jobs that your friends and family may have. The sheer effort you have to make to get a business up and running will leave you feeling lonely. While it might seem almost expected to feel lonely during your startup journey, loneliness is a slippery slope to several health conditions.

8 Techniques to Get Readers Rolling Right into Your Content

8 Techniques to Get Readers Rolling Right into Your Content

We’ve all been there. We’ve spent hours crafting the perfect blog post, article or white paper, but no one is reading it. Why? It could be for a million reasons, but often it’s because we’re not doing enough to get people to come to our content. In this article, we’ll learn about the eight techniques that will help you draw in readers and get your content read!

Amazon vs Flipkart Who Will Win Festival Sale War in India

Amazon vs. Flipkart: Who Will Win the Big Festival Sale War in India?

Amazon India and Flipkart, the two biggest ecommerce giants in India, have always been in a neck-to-neck competition for supremacy in the country. There is no better occasion to showcase their strength and take advantage of people’s shopping mood than during the Indian festive season, which begins in late September featuring various festivals, like Durga Pooja, Dussehra and Diwali.

Reviewing Top AI Boyfriends on Google Play Store

Anima vs. Replika: Reviewing Top AI Boyfriends on Google Play Store

Finding your perfect match can be a long and tedious process. You can go on date after date and still have a long way to go before you find your soulmate. In the meantime, you can curb your loneliness by speaking to an artificial intelligence (AI) chatbot.There are dozens of AI chatbots on the market today that give you the experience of having someone to vent your issues to and discuss your daily lives with.

Shrinkflation

What Is “Shrinkflation” and Why Opting For It Isn’t Companies’ Only Choice

You might have noticed grocery prices are soaring, or your usual go-to pack of chips is shrinking in size—all thanks to massive inflation. As of August 2022, the U.S. consumer price index (CPI), which measures the change in consumer prices for a specific set of goods over a period, has increased by 8.3% (year-on-year). Although it has gone down slightly from 8.6% in May, the highest it has ever been since 1981, it remains high and worrying.