How China prohibits cryptocurrency and mining
While testing the national digital currency, the People’s Bank of China has ruled all transactions using bitcoin and other cryptocurrencies unlawful. The information is available on the regulator’s website. Read the article to learn about the status of cryptocurrency and mining in China.
Until May of this year, China accounted for half of the world’s bitcoin mining. Since the spring, crypto has been steadily prohibited in the country, and banks and payment systems have ceased accepting it. Chinese police discovered hundreds of miners stealing power from government facilities as part of a huge push to abolish cryptocurrencies. The issue is especially important given that the country is suffering from a scarcity of electricity. According to state-run Chinese media, the provinces of Zhejiang and Jiangsu have begun to crack down on crypto miners who have depleted the resources of state-owned firms, government organizations, colleges, and research institutes.
Government entities possess around 20% of the 4,500 Internet addresses involved with bitcoin mining in Jiangsu. In other words, the quantity of energy is substantial: 260 thousand kWh. Cryptominers often link their equipment to cloud services known as mining pools to validate blockchain transactions, allowing them to trace their position. These technical factors facilitated investigators to discover the existence of government entities. Then, the Zhejiang government stated the official social network, attaching photos of the equipment seized in the raids: unlawful mining was found at 184 government IP addresses.
Authorities in China’s Sichuan province, a key center for cryptocurrency mining, stopped mining at the end of June. By June 20, 26 mining enterprises had been disconnected. On September 24, the People’s Bank of China declared all cryptocurrency-related activity unlawful. This involves mining, purchasing, and selling cryptocurrencies, as well as storing and trading them. In addition, even cryptocurrency tracking websites such as CoinGecko, CoinMarketCap, and TradingView were prohibited in China on September 28. In turn, several years ago, cryptocurrency exchanges were prohibited too. In 2020, the PRC generated 7,815 terawatt-hours (TWh) of energy. It is also worth noting that China created around 65 % of bitcoins produced worldwide last year.
The Yingjiang County Office of the People’s Government issued a directive for local hydropower plants to tighten down on all businesses involving digital currency mining. Miners working on the grounds of power plants will be required to remove any equipment at their own expense. If this condition is not met, consequences will be imposed on the power plants. Furthermore, the government has urged enterprises to cease mining cryptocurrencies and has forced them to impose higher power bills on companies that continue to violate China’s cryptocurrency prohibition, according to CoinGape.
The major motivation for such governmental regulation, besides financial stability and digital Juan, is China’s goal to become a more environmentally friendly country. For that purpose, it has signed several international agreements. Last year, Chinese President Xi Jinping stated that the government plans to attain peak carbon dioxide emissions by 2030, then decrease and establish carbon neutrality by 2060. Bitcoin, on the other hand, threatened to undermine their ambitions. Without political intervention, China’s annual blockchain energy consumption was predicted to exceed 300 TWh by 2024. Thus, the results would be an additional 130 million tons of CO2.
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