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China’s cryptocurrency crackdown intensifies as Sichuan province orders a stop to mining operations
- Southwestern Sichuan province reverses its previous lenient stance on cryptocurrency mining activities
- Authorities on Friday issued an order to ‘clean up and terminate’ cryptocurrency mining operations in the province
The Sichuan government has ordered a halt to all cryptocurrency mining operations in the southwestern province, reversing its previous lenient stance on the sector amid a national crackdown against these large power-intensive activities.
The provincial branch of the National Development and Reform Commission (NDRC) and the Sichuan Energy Bureau jointly issued on Friday an order to “clean up and terminate” these mining operations, according to a notice obtained and verified by the South China Morning Post.
The notice said 26 companies that have been inspected and reported as potential cryptocurrency mining enterprises must be closed down this Sunday by the Sichuan branch of the State Grid Corp of China, the world’s largest electric utility. The Sichuan branch of NDRC, the macroeconomic management agency under the State Council, will supervise the shutdown, while tracking electricity usage and providing daily reports.
Electricity providers are required to investigate their clients and immediately cut off their power supply should they be found to be involved in cryptocurrency mining, according to the order. These providers must report the results of their inspection to the NDRC before June 25.
Sichuan’s initiative makes it the latest cryptocurrency mining hotspot in China to clamp down on the activity.
It follows the lead of northwestern Qinghai province, northern Inner Mongolia region, southwestern Yunnan province and northwestern Xinjiang region in pushing out cryptocurrency mining enterprises. Xinjiang is the world’s largest bitcoin mining region by hash rate, a measure of total computational power used to support the bitcoin network, according to the latest estimates from the Cambridge Bitcoin Electricity Consumption Index.
Sichuan, which is a large producer of hydropower, had earlier appeared to be dragging its feet on implementing a central government mandate to crack down on cryptocurrency mining because of its ample clean energy capacity.
Cryptocurrency mining requires massive amounts of electricity to run the large computer server arrays needed to do the complex calculations required for cryptocurrency transactions, as well as for the air conditioning needed to cool these facilities.
The central government’s initiative against cryptocurrency mining has come after three Chinese state-backed financial associations jointly issued a warning in May about the risks stemming from bitcoin and other volatile digital tokens.
The government, which has banned financial transactions of bitcoin and other digital tokens since 2019, had turned a blind eye towards the cryptocurrency mining farms in Inner Mongolia, Sichuan, Xinjiang and other mainland locations until recently.
The heavy power consumption of cryptocurrency mining also clashes with China’s vow to reduce carbon dioxide emissions by at least 65 per cent by 2030, relative to 2005 levels, and then achieve carbon neutrality by 2060. Mining bitcoin, for example, uses around 121.36 terawatt-hours a year, which is larger than the total energy used by Argentina, according to a recent report by Cambridge University.
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