China’s top economic planner to list cryptocurrency mining as abandoned industry
Published: Oct 21, 2021 03:03 PM
Bitcoin, a type of cryptocurrency Illustration: VCG

Bitcoin, a type of cryptocurrency Illustration: VCG

China's top economic planner will list cryptocurrency mining as an abandoned industry in a new version of the nation's industrial structure adjustment guidance, as the country steps up virtual currency regulation to fend off financial risks, according to an announcement on Thursday.

The move by the National Development and Reform Commission (NDRC) on cryptocurrency mining will facilitate the optimization of China's industrial structure, and promote energy conservation and emissions reduction, and help the country achieve carbon peak and carbon neutrality, the Shanghai Securities News reported.

According to the revised guidance, cryptocurrency mining is to be characterized as a sector that makes only a small contribution to the national economy but consumes a lot of energy and creates a lot of carbon emissions. 

In addition, as risks resulting from the production and trading of cryptocurrencies become more prominent, the sector's disorderly development has adversely affected China's high-quality economic and social development. 

Up to three-quarters of the world's supply of Bitcoin was reportedly mined in China, but the process consumes vast amounts of electricity, and energy produced by coal-burning plants is a massive contributor to air pollution.

Chinese officials moved to crack down on mining operations. On September 3, the NDRC, along with 10 other departments, released an announcement about regulations on cryptocurrency mining, suggesting that the activity should be added to the list of abandoned industries.

Amid the crackdown, more than 20 major firms involving cryptocurrency businesses, including trading, mining and information platforms, suspended services for Chinese mainland users and announced plans to exit from the Chinese market as of October 7. 

Their exit means over 90 percent of crypto-related businesses have been shut down in China, following the country's broadest and strictest ban on crypto trading yet, observers said.

Leading crypto exchanges with large user bases in the Chinese mainland, such as Huobi, said they had suspended new user registrations in the mainland and would leave the market entirely by year-end.

In recent months, several large virtual cryptocurrency mining operations in China, including in Southwest China's Sichuan Province and North China's Inner Mongolia Autonomous Region, have been shut down, partly out of consideration for freeing up energy consumption, according to media reports.

Global Times