China cracks down on bitcoin

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China is a major player in cryptocurrency mining with 65.1% of the bitcoin hash rate in April 2021, according to estimates from the Cambridge Bitcoin Electricity Consumption Index. Yet the Chinese government banned financial transactions in bitcoin and other cryptocurrencies in 2019. So far, it has turned a blind eye to mining farms with a strong presence in Inner Mongolia, Sichuan and Xinjiang. But the situation is about to change drastically: the government body responsible for financial regulation announced that it will crack down on mining. The Chinese government is not only worried about financial stability, but also about the role of bitcoin in money laundering, drug trafficking and smuggling, according to Xinhua News, the official media of the Communist Party. It also mentions the profligate and expensive use of energy for mining, which clashes with China’s drive to reduce CO2 emissions by at least 65% from 2005 levels by 2030, and then achieve carbon neutrality by 2060.

China is not the only country concerned about the role of bitcoin and other cryptocurrencies in illegal activity. Late last week, the US Treasury Department announced that companies must report cryptocurrency transactions over $ 10,000 to the Internal Revenue Service. Meanwhile, Iran temporarily banned mining until September 22, after a drop in hydropower supply caused a series of blackouts in major cities.

⇨ Ars Technica, Tim De Chant, “China will likely ban all bitcoin mining soon.”

⇨ South China Morning Post, Iris Deng, “China to crack down on mining of cryptocurrencies, delivering a one-two punch to digital tokens after triggering global sell-off.”

2021-05-24