China is at war with cryptocurrency mining for a long time now. The People’s Bank of China and nine other agencies made all the crypto transactions illegal in September this year. And, this was only the first step. This started a campaign, where Chinese authorities shut down multiple bitcoin mining farms. On 16th November, China instructed its state-owned corporations to cease cryptocurrency mining. It also stated that it is considering punitive measures such as increased electricity bills for those who resist the prohibition.
China and its relation with crypto
China accounted for 90% of worldwide bitcoin transactions five years ago. According to data source Chainalysis, crypto farms in China mined about half of the world’s bitcoin until this spring. The country’s digital wallets collected $150 billion in cryptocurrencies in the first half of the year, ranking second only to the United States.
So, what caused this U-turn? China being an authoritative government is strictly against anything that undermines its control. A major selling point of cryptocurrencies goes against the ideology of Beijing. The decentralised networks of computers that run digital currencies are beyond the control of any central authority which is unexpected to the Chinese authorities.
Bitcoin or crypto in general, according to Beijing, allows Chinese nationals to circumvent the country’s rigorous capital restrictions, which limit transfers overseas to $50,000 per year. Even within the country, it allows regular individuals to move money and make investments without the involvement of the government.
War on Crypto
This fresh warning comes amid the East Asian country’s prolonged crypto prohibition. As a result, cryptocurrency miners and exchanges like Huobi and Binance are beginning to shift to countries with crypto-friendly policies. Nonetheless, despite the crypto crackdown, Chinese people continue to trade Bitcoin. And Beijing officials are not giving up on their attempts to discover ways to prohibit the usage of cryptocurrency.
Chinese officials began scanning residents’ IP addresses last month to detect crypto mining activity. Furthermore, officials in several Chinese regions are investigating government personnel who are unlawfully mining Bitcoin. Despite all of these efforts, energy usage has not decreased significantly. This has prompted officials to step up their efforts and confront state-owned businesses.
China and Industrial-scale Crypto Mining
The Chinese’s National Development and Reform Commission, according to a Bloomberg report, intends to crack down on large-scale bitcoin mining. And, by implication, all state-owned enterprises that engage in such behaviour. As the government attempts to fulfil its carbon-neutral targets, Beijing has clamped down hard on bitcoin miners this year. Officials blame crypto-miners for anything from energy waste to catastrophic coal mining mishaps.
Concerns over the country’s power supply for the upcoming winter season prompted a vigorous campaign against miners. Officials claimed to be on the hunt for people who attempted to masquerade themselves as data researchers and storage facilities to continue their operations. Since then, coal prices have plunged, making the impact of punitive tariffs on power bills less visible.
China dismissed a former Jiangxi provincial official over the weekend for offences including encouraging virtual currency mining, according to the Central Commission for Discipline Inspection. According to the report, authorities accuse Xiao Yi of misusing his authority by introducing and supporting firms that engage in virtual currency mining operations which violate the law, as well as receiving bribes.
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