China calls crypto mining ‘extremely harmful,’ but not for this reason
Why does China hate crypto mining? It’s a question many have asked, but the answer isn’t what one would expect. Turns out, as some analysts suspected, it might not be about the coin at all.
Answers from above
On 16 November, a notice released by China’s National Development and Reform Commission made it clear why the country was so vehemently against crypto mining – and the lengths it would go to get its own way.
First and foremost, a translation of the document called virtual currency mining “extremely harmful.” It then moved on to point out crypto mining’s energy consumption and carbon emissions. Promising to take action at all levels of society, the statement clarified,
“For units that implement residential electricity prices, if they find that they are involved in virtual currency “mining” activities, they will study the imposing punitive electricity prices on them, forming a high-pressure situation that continues to rectify virtual currency “mining” activities.”
The right guess
China’s stance confirms what those like crypto analyst Raoul Pal have said in the past – China doesn’t necessarily have a bone to pick with Bitcoin. Rather, the country is focusing on meeting various environmental targets. The Commission’s statement explained,
“Remediation of virtual currency “mining” activities is of great significance to promote the optimization of my country’s industrial structure, promote energy conservation and emission reduction, and achieve the goal of carbon peak and carbon neutrality on schedule.”
China has put itself on a carbon reduction schedule and urged developed countries to play their part as well. However, President Xi Jinping still did not attend the UN’s COP26 climate conference, leading to widespread frustration.
But, there are internal pressures as well. Known for its fluctuating electricity prices and the risk of power shortages in winter, China is clearly under pressure to control how its electrical resources are used. In the grand scheme of things, the regime appears to view crypto mining as harmful waste.
As smoky as it looks?
While the Chinese authorities are focusing heavily on carbon emissions, a significant part of crypto miners’ operations was located in areas with abundant renewable energy sources. For example, Xinjiang – once a major Bitcoin mining hub – recorded issues due to the excess power supply. What’s more, the northwestern province is rich in not just coal, but also wind and solar energy bases.