Cryptomining is big business in China, accounting for more than half of global bitcoin production. But the State Council, China’s cabinet, last month vowed to clamp down on bitcoin mining and trading as part of a series of measures to control financial risks.
China’s crackdown against cryptocurrency “mining”, has reached the southwest province Sichuan. Authorities ordered the closure of cryptocurrency mining projects in the major mining center.
China’s cryptomining industry is a major business. It accounts for over half of all global bitcoin production. The Chinese cabinet’s State Council last month pledged to crack down on bitcoin mining and trade as part of a series to reduce financial risk.
Others, like Inner Mongolia, have also cited cryptocurrency mining’s use electricity generated from polluting sources, such as coal, in order to target the industry.
Friday’s action in Sichuan, where miners rely on hydropower to power the computer equipment that verify bitcoin transactions, suggests that the crackdown is more broad-based.
Sichuan Provincial Development and Reform Commission and Sichuan Energy Bureau jointly issued a notice dated Friday and seen on Reuters, requesting the closing of 26 cryptocurrency mining projects by Sunday.
According to data from the University of Cambridge, Sichuan is China’s second-largest bitcoin mining province. To take advantage of the abundant hydropower resources, some miners relocate their operations there during rainy season.
The notice directs Sichuan state electricity companies to inspect and correct the situation, and report their findings by Friday. They must immediately cease supplying electricity to any cryptomining projects that they have detected.
Authorities in Sichuan urged local governments to stop coordinating cryptomining projects and closed them down. It also banned any new projects.
Mongolia and Yunnan have imposed a ban on bitcoin mining.
The notice on Friday seems to indicate Beijing’s discontent with cryptocurrency mining. This is in addition to cases where it uses electricity from burning coal.
Winston Ma, adjunct professor at NYU Law School and author of “the Digital War”, stated that “renewable power doesn’t help.”
Ma said that the four largest mining areas – Inner Mongolian, Yunnan, Yunnan, and Sichuan – have taken similar measures to curb mining, even though the latter two are largely based on hydropower while the first two rely on coal.
Due to the crackdown, some miners are considering moving.