Xi Jinping is serious. China turns the tap on miners. (Photo: Lukasz Stefanski / shutterstock)
The miners in the province of Sichuan in the southwest of the People’s Republic of China did not expect this. Because of the large quantities of electricity from hydropower available there, they had felt relatively safe, at least not to be among those who would soon be turned off.
Short warning period leaves miners no time for maneuvers
It turned out differently. As the Reuters news agency confirmed after its own inspection, the Sichuan Provincial Development and Reform Commission and the Sichuan Energy Office issued a joint announcement on Friday calling for the closure of 26 mining projects by Sunday – within two days.
In addition, the local authorities are requested to search for further miners or miner pools beyond the 26 named projects and to close them immediately . Likewise, no permits may be granted for new mining projects. Electricity supplies to the miners should be stopped immediately, according to the order.
The authorities had already cracked down on the provinces of Inner Mongolia and Xinjiang with similar harshness. Up until now it had been assumed that the closings were driven by the use of electricity from coal-fired power plants – and therefore for environmental reasons.
Sichuan was the second largest mining province
That turns out to be a mistake. Apparently, China wants to show that it will uncompromisingly enforce the tightened course against the country’s crypto industry. Cryptomining is big business in China. Around 65 percent of global Bitcoin production comes from there.
According to surveys by Cambridge University, Sichuan has so far been China’s second largest Bitcoin mining company after Xinjiang. Province. The status was underpinned by the fact that some miners use the rainy summer there to benefit from the almost abundant hydropower resources.
China’s Reasons: Protecting Citizens from Risks, CO2 Reduction and the E-Yuan
The Chinese government justifies its actions with this that cryptocurrencies offer too high an investment risk for citizens, which is why they must be protected. Experts see two other reasons as decisive for the actions of the government of President Xi Jinping.
On the one hand, China has committed itself to reducing carbon dioxide emissions of the country by 2030 at the latest by 65 percent. Bitcoin mining is seen as a problem in reducing CO2 around the world. According to the latest estimates, the Bitcoin industry consumes around 111 terawatt hours annually – more than the Netherlands.
On the other hand, China is setting a growing pace with the introduction of its own digital currency, the e-yuan. It has a number of clear advantages for the government when it comes to controlling its own people. A largely unregulated digital currency like Bitcoin is diametrically opposed to these plans.
Miners have to change location
The large mining pools now have no choice but to change countries. Francis Suarez, the crypto-friendly mayor of the city of Miami in the US state of Florida, has already been promoting it. He would like to welcome the pools that are migrating from China in his city and advertise cheap and “clean” nuclear power.
Argentina is also a potential location for Crypto miner. Electricity is subsidized there. Last but not least, El Salvador should offer itself. After all, the country has granted Bitcoin legal tender status.
