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China’s Sichuan province halted more than two dozen crypto mining operations over the weekend, becoming the latest Chinese crypto hub to crack down on bitcoin mining. The crackdown on crypto mining has intensified in China in recent months as Beijing seeks to control energy use as well as financial risk.
A government order issued by two local authorities in southwest China’s province ordered 26 crypto mining companies to shut down by Sunday. As a result, the price of bitcoin plunged to a two-week low on Monday, according to CNBC.
Sichuan’s move followed after the Inner Mongolia Autonomous Region and northwest Qinghai Province banned crypto-mining energy mining activities. Adding up the bans, China halted about 90% of the country’s crypto mining capacity, according to Global Times.
China is the biggest bitcoin mining country, largely because of its cheap electricity. Sichuan, in particular, is known for its abundant and cheap hydropower. Bitcoin mining in China accounts for more than 75% of the world’s bitcoin hashing power, according to an article published in Nature Communications in April.
However, not all of the energy is clean. The Nature Communication study estimated that 40% of the energy used for bitcoin in China comes from coal-fired power plants. Nationally, cryptocurrency mining ranks among the top 10 industrial sectors in China in terms of emissions production.
Nationwide bans have fallen as China, a major signatory to the Paris Agreement, is seeking to cut carbon emissions. The authors of the Nature Communications article warned that heavy mining of crypto in China could undermine the country’s emissions reduction efforts without political intervention.
The widespread crackdown on crypto mining is also part of the central government’s efforts to strengthen financial risk controls. At the end of May, the Financial Stability and Development Committee, a Chinese financial regulator reporting to the State Council, the Chinese cabinet, said that the Chinese financial system must crack down on bitcoin mining and trading, “by resolutely preventing the transfer of individual risks to society”.
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