China’s clampdown on its cryptocurrency industry is continuing, with province-level governments in Xinjiang and Qinghai joining Inner Mongolia in banning crypto mining, leading to a significant hashrate decline.
The local government of Changji Prefecture in Xinjiang has reportedly instructed cryptocurrency mining companies in the Zhundong area, a crypto mining hotbed, to cease operations, according to local media reports. The companies were ordered to shut down all crypto mining activity by 2 p.m. on June 9.
The provincial government of Qinghai, in northwestern China, issued a notice on Tuesday, instructing local government entities to shut down crypto mining activities in their areas.
In the wake of the bans, China-based mining pools are experiencing hashrate drops. In the 24 hours up to Thursday evening Hong Kong time, China-based pools AntPool and Poolin saw hashrate declines of 12% and 4%, respectively. BTC.top, one of China’s major mining pools, recorded a 35.9% hashrate decline over the course of the day.
Broadening ban
The latest moves by the Qinghai and Xinjiang governments come after Inner Mongolia — previously one of the world’s largest Bitcoin mining hubs — unveiled new proposals to give added force to its all-out ban on crypto mining, which took effect last month.
China has recently taken numerous steps to rein in the cryptocurrency sector, which has seen an increase in the number of scams. The Ministry of Public Security on Tuesday said more than 1,100 people suspected of involvement with predatory scams related to cryptocurrencies and money laundering activities had been arrested.
Tony Tong, a co-chairman and co-founder of the Hong Kong Blockchain Association, told Forkast.News in an interview that he would recommend that Chinese authorities “keep a more open mind to understand the industry,” and monitor its activities rather than chasing major players away.
“That will only benefit the countries where these [miners] eventually land and boost the blockchain development of those nations,” Tong said, adding that BTC.com had requested the association’s help to find mining farms in Canada and the U.S.
“China’s move is not surprising given its history of crypto repudiation,” Haohan Xu, CEO of crypto trading platform Apifiny, told Forkast.News in an email. “The news also reflects recent expansion of mining to other countries like the United States, Russia, Kazakhstan and Malaysia — and the increased throughput of existing miners outside of China. Some trading platforms are even starting to mine Bitcoin to help increase liquidity for their traders and exchange partners.”
Hydropower haven?
BTC.top — whose mining facilities are located mostly in Xinjiang, Yunnan and Sichuan, but also in North America — told Forkast.News that it was concentrating its China mining operations in the southwestern province of Sichuan because of its abundance of hydropower resources.
“We are moving to Sichuan as it’s now at its peak for water supply, so we could benefit from lower electricity expenses,” a BTC.top company representative said.
Meng Liu, a blockchain analyst at research firm Forrester who previously worked for Ripple, told Forkast.News that in the short term, miners could shift their operations to other regions in China, but that it was not a very sustainable solution in the longer term.
“Sooner or later we’ll see a crypto mining ban on the national level across China,” he said.
The enormous energy required to carry out crypto mining is considered a key concern for the Chinese government, Seen-Meng Chew, a professor of the Chinese University of Hong Kong Business School, told Forkast.News in an interview.
“[Crypto mining] is going against the Chinese plan of becoming carbon neutral by 2060,” he said. “It is a very energy-intensive activity, so more greenhouse gases may be released as a result of these crypto mining activities that consume lots of computing power.”
Chinese leader Xi Jinping told the UN General Assembly in 2019 that China would halt its rising carbon emissions by 2030 and achieve carbon neutrality in 2060. China, the world’s second-largest economy, has even written “Control energy consumption and achieve carbon neutrality” into its 14th Five Year Plan, published in February.
The stated intention to become carbon-neutral is nothing if not ambitious. According to environmental NGO Greenpeace, around 60% of Chinese electricity originates from coal-burning plants, and electricity consumption is still growing in China.