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China Increases War on Crypto Mining out of Fear for Winter Power Shortages
Recent reports show that China is increasing its crackdown on crypto mining activities. The main reason behind the crackdown was China’s 5-year plan to be carbon neutral. Yet, other reports state that power shortages in the upcoming winter could be the reason behind the crackdown. Furthermore, China could be looking to strengthen its digital yuan.
China Intensifies War on Crypto Miners
Recently, there have been reports that China is increasing its crack illegal crypto mining. The China crypto crackdown has been on and off for several years now. This 2021 crackdown seems more serious. Yet, Bloomberg’s report shows that the Government is increasing its crackdown efforts.
The aim is to catch up with some miners who went into hiding when the crackdown began. Reports show that a miner has been moving his 100 rigs from one warehouse to another to avoid detection.
According to Bloomberg, the Government is investigating research centers, colleges, and data collection organizations. There has been an increase in the number of research facilities since the crackdown started. An anonymous tip noted that most institutions are opening as a disguise for illegal mining. The Government has been going from province to province investigating such centers.
China’s fight on crypto began in mid-2021 when the Government restricted any mining activities. They even banned financial institutions from connecting to any crypto transactions. Yet, with the recent intensified actions, the Government could ban crypto altogether.
Banning For Environmental Reasons
According to several reports, China’s fight against crypto has been for environmental reasons. The Government wants to achieve carbon neutrality in the next five years. Mining currencies like Bitcoin and Ethereum take much electricity globally every year. Thus, China wants to end the environmental impact caused by crypto mining.
The Government’s recent efforts grew because of the concerns over power supplies. The Government is preparing for the winter season. There are concerns about possible power shortages. Thus, the Government is on a mission to ensure they reduce power shortages during winter.
The bans are forcing most crypto miners to move their equipment to other countries. It’s not clear if things will cool down after winter since the China crypto ban has been on and off for years.
Favoring the Digital Yuan
As China bans crypto mining, it is launching its digital currency. This CBDC will improve the efficiency of China’s financial system. But, it’s also possible that the Digital yuan aims to weaken the US dollar. As more people adopt the digital Yuan, China can easily track their activities.
The launch and promotion of Digital yuan could also be the reason behind increased bans. By killing bitcoin use in the country, the digital yuan will have increased power in the digital space. The higher the power Yuan has digitally, the more control China will have in the financial world.