Chinese authorities are not quite happy with the booming of cryptocurrency, crypto mining to be precise. It is a destructive practice that threatens the country’s efforts to curb carbon emissions, leading to a crackdown on crypto mining.
Meng Wei, the National Development and Reform Commission, spokesperson targeted bitcoin mining in a press conference, calling it out for consuming huge amounts of energy and producing carbon emissions. According to Meng, the NDRC (top economic planner of the country) will launch a rigorous clampdown on cryptocurrency mining by targeting commercial mining and the role of state-owned businesses in the industry.
She further stated that crypto production and trade lead to “prominent risks” and called the industry “blind and disorderly.” The NDRC, in its new push, said it would raise the prices of electricity for any institution that abuses its access to subsidized power for mining crypto. Authorities have so far subsidized electricity for schools, community centers, or other public welfare institutions.
Bitcoin price plummeted to more than 7% to $60,889 after the remarks, its lowest value in a week. The reason was not evident, but it aligned with the NDRC press conference. Bitcoin’s plummet was followed by ether, the second-largest digital token after bitcoin; it fell more than 8% on Tuesday to $4,297, the worst in two weeks.
The crackdown on crypto mining is not news; China intensified its efforts to attack cryptocurrency since May by banning cryptocurrency trading, saying it would scrutinize mining in the country.
More than 75% of bitcoin mining happens in China, according to research published by Nature Communications, a peer-review journal, in April.
Bitcoin continues to have its banner year, regardless of the fall. The cryptocurrency has soared above 110% in 2021, crashing the record high of $69,000.
But why is China after crypto?
Financial Risk
Cryptocurrencies pose a huge financial risk. People can potentially reign in such practices by evading stringent national controls on capital.
Yuan, now in a digital avatar
The restrictions on currencies with no restrictions are followed by the digital version of the yuan, allowing the central bank of China to exercise more control over the flow and exchange of money.
Climate Targets
Beijing has a vision of becoming carbon neutral by 2060, and crypto mining is not helping. Crypto mining is energy-intensive and consumes a lot of power, with machines solving complex algorithms to verify transactions.
Power Shortage
China is suffering through severe power shortages, affecting millions of households and factories with power rationing.
According to Meng, the latest effort to curb mining will be significant to China’s goals to cut down carbon emissions and achieve carbon neutrality. Meng strongly proposed that China must strictly forbid cryptocurrency mining from rising from the dead ashes.