China's top economic planner further regulates virtual currency mining to achieve carbon neutrality
Published: Nov 16, 2021 12:24 PM
Bitcoin Photo: CFP

Bitcoin Photo: CFP

 The National Development and Reform Commission (NDRC), China's top economic planner, said on Tuesday that responsible authorities will further regulate cyptocurrency mining, targeting industrial-scale Bitcoin mining and involved state-owned enterprises. Analysts said that the new regulation will block the last remaining space for crypto mining in the country.

The new rule aims to crack down on small-scale crypto mining in China, mostly in the form of family workshops. It further underscores Chinese authorities' unwavering determination to clear out energy-intensive crypto mining to push forward a green transition and fend off financial risks, industry insiders said.

The NDRC will focus on strengthening regulations and comprehensive monitoring of industrial-scale mining and involved state-owned units, while increasing the penalties for enterprises that seek residential electricity rates while operating cryptocurrency mining activities, Meng Wei, a spokesperson from the NDRC, said at a press briefing on Tuesday. 

The new rule will further regulate companies that are still operating mining with a fluke mentality and trying to take advantage of the current electricity pricing policy, in a bid to completely eliminate the sector, Han Xiaoping, chief analyst at energy industry website told the Global Times on Tuesday, noting that it will still take time to fully clear out the sector. 

An industry insider, who spoke on condition of anonymity, told the Global Times on Tuesday that at least 80-90 percent of China's crypto mining capacity has either been eliminated or migrated overseas. 

Virtual currency mining consumes a large amount of energy and leads to high carbon emissions, which is not beneficial for industrial development or for scientific and technological progress, said Meng, adding that the risks derived from the production and trading of virtual currencies are becoming increasingly prominent.

Meng stressed that the blind and disorderly development of mining will seriously damage high-quality economic and social development as well as hold back efforts to reduce carbon emissions. 

"The new rule will close some loopholes, like computing machines placed within state-owned enterprises or data centers that are hard to detect in most circumstances, though they account for a negligible share of global mining capacity," the insider said.

The insider added that while Bitcoin requires massive mining farms, most of the small computing machines are used to mine Ethereum, the world's second-largest cryptocurrency, whose price has ballooned about six times to date this year.

The NDRC held a meeting with responsible authorities on November 10, which discussed the work process for monitoring and regulating mining activities across the country and deployed tasks for the next phase. The meeting ordered local governments to take responsibility and implement regulations to rectify local mining activities and strictly deal with state-owned units involved in virtual currency mining.

Xiao Yi, a former vice chairman of the Jiangxi Provincial Committee of the Chinese People's Political Consultative Conference, has been sacked and expelled from the Party for violations including supporting virtual currency mining, according to a statement issued by the Central Commission for Discipline Inspection on Saturday. 

Global Times