China’s government announced a new phase in its campaign to shut down crypto mining operations in the nation on Tuesday. Meng Wei, a spokesperson for China’s macroeconomic planning authority. The National Development and Reform Commission, stated during a Tuesday news conference that cryptocurrency mining is a “extremely harmful” industry that jeopardises China’s goal of carbon neutrality.
Beijing’s tough stance on crypto mining was almost certainly a component in Tuesday’s crypto selloff, which continued into Wednesday. Both Solana and Ethereum have lost more over 7% in the last 24 hours, while Bitcoin has lost 2.9 percent.
Bitcoin and other digital currency markets have been cooled by the US government’s new tax reporting requirements for digital currency and Twitter CFO Ned Segal’s comments that the platform had no intentions to invest in crypto at the moment.
This indicates that China has not entirely prohibited cryptocurrency mining in the country and is seeking to eliminate any remaining loopholes in the prohibition
According to available information, the global Bitcoin mining sector has been fundamentally disrupted since China banned the practise of cryptocurrency mining.
Data from the University of Cambridge’s Centre for Alternative Finance, China’s proportion of global Bitcoin mining had decreased to less than 10% by July 2021. While anecdotal evidence suggests that the majority of Chinese Bitcoin miners either relocated to Kazakhstan, the United States, or Canada or sold their equipment at deep discounts and abandoned the sector.
Although Cambridge’s data is not perfect, they acknowledge this in their paper.
Bitcoin miners, on the other hand, can conceal their location by concealing their IP addresses via virtual private networks (VPNs) or proxy services.
Cambridge believes that miners from unknown countries are likely to route their IP addresses through Germany and Ireland, given the two nations control a disproportionately big portion of global Bitcoin mining despite the absence of proof of considerable mining activity.
According to official Chinese media, approximately 10% of Chinese blockchain and cryptocurrency enterprises remain operational at the moment.
Beijing is more eager than ever to eliminate any residual crypto mining stragglers as a result of the country’s energy problems.
Chinese officials intend to investigate
According to Meng, Chinese officials intend to investigate whether state-owned enterprises continue to assist crypto mining. According to her, the government will be responsible for monitoring and sanctioning state-owned enterprises engaging in mining activities at all levels of government.
Meng vowed that Beijing would conduct an inquiry to see whether public organisations such as schools, hospitals, and community centres are involved in crypto mining activities with state funding. Those detected violating China’s crypto mining ban would face increased electricity expenses, she warned.
When it comes to industrial and technological growth, “Virtual currency mining features high energy consumption and carbon emissions, and doesn’t play a positive role in industrial development and technological progress,” Meng noted.
When it comes to supporting high-quality economic and social development, energy conservation, and emission reduction, “[Crypto’s] blind and disorderly growth has a significant negative impact on promoting high-quality economic and social development, energy conservation, and emission reduction.”