Cryptocurrency mining operators are suspending their operations in China after Beijing cracked its whip on Bitcoin mining and trading. This is the first time that a State Council committee has targeted virtual currency mining.
Experts say about 75% of the world’s bitcoin mining is done in China where there is cheap electricity and relatively easy access to manufacturers who make specialized hardware. The miners run purpose-built computers to solve complex mathematical puzzles that effectively allow a bitcoin transaction to happen; the miners then receive a bitcoin as a reward.
Last week, a study highlighted that without appropriate interventions and feasible policies, the intensive bitcoin blockchain operation in China can quickly grow as a threat that could potentially undermine the emission reduction effort taken place in the country. According to the Cambridge Bitcoin Electricity Consumption Index, worldwide bitcoin mining consumes an estimated 128.84 terrawatt-hour (Twh) per year of energy, more than entire countries such as Ukraine and Argentina.
“Without any policy interventions, the annual energy consumption of the bitcoin blockchain in China is expected to peak in 2024 at 296.59 Twh and generate 130.50 million metric tons of carbon emissions correspondingly,” the authors of the study said. They highlighted that by 2024, China’s bitcoin energy usage will surpass the total energy consumption of Italy or Saudi Arabia.
Crypto miners use increasingly powerful, specially-designed computer equipment, or rigs, to verify virtual coin transactions in a process that produces newly minted cryptocurrencies such as Bitcoin. After Beijing’s tough standing on crypto mining, a number of crypto operators are moving out. Huobi Mall, part of cryptocurrency exchange Huobi, said all its custody businesses have been suspended. “Meanwhile, we are contacting overseas service providers, to pave way for exports of mining rigs in the future,” Huobi Mall said.
BTC.TOP, a crypto mining pool, also announced the suspension of its China business, citing regulatory risks. Its founder Jiang Zhuoer said that in the future, BTC.TOP will mainly conduct crypto mining business in North America. “In the long term, nearly all of Chinese crypto mining rigs will be sold overseas as Chinese regulators crack down on mining at home,” he said. “Eventually, China will lose crypto computing power to foreign markets as well.”
HashCow is also suspending operations. In an official statement, it said it will suspend buying new Bitcoin rigs and promised a full reward to those investors who had placed orders for computing powers but had not yet started mining.