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China’s Crypto-Mining Crackdown Advances to Sichuan
China’s crackdown on cryptocurrency mining has extended to the southwest province of Sichuan, reversing its previous lenient stance on the sector amid a national crackdown against these significant power-intensive activities. As a result, the authorities ordered cryptocurrency mining projects to close in the major mining center.
According to data compiled by the University of Cambridge, Sichuan is China’s second-biggest bitcoin mining province. The recent development will further cut down computing power for crypto mining after third-place Inner Mongolia conducted a wholesale ban on the mining activities in April.
According to a notice obtained and verified by the South China Morning Post, the provincial branch of the National Development, Reform Commission (NDRC) and the Sichuan Energy Bureau jointly issued an order on Friday to clean up and terminate these mining operations.
Tracking Electricity Usage
The notice also directed electricity companies in Sichuan to conduct inspections and halt supplying electricity immediately to crypto mining projects they have detected.
Twenty-six companies had been inspected and reported as potential cryptocurrency mining enterprises. As a result, the companies must be closed down this Sunday by the Sichuan branch of the State Grid Corp of China, the world’s largest electric utility.
Macroeconomic management agency, the Sichuan branch of NDRC, under the State Council, will oversee the shutdown while tracking electricity usage and giving daily reports.
Other regional mining centers like Xinjiang, Inner Mongolia, and Yunnan have ordered crackdowns on bitcoin mining.
The Bottomless Pit of Energy
Cryptomining is a significant business in China, accounting for over half of global bitcoin production. In recent years, the Chinese government has been keen on cryptocurrency, and scrutiny over the virtual industry escalated last month with the State Council, China’s cabinet, vowed to stop bitcoin mining and trading as part of measures against financial risks.
The government, which has prohibited financial transactions of bitcoin and other digital tokens since 2019, had turned a blind eye to the cryptocurrency mining farms in Inner Mongolia, Sichuan, Xinjiang, and other mainland locations until recently.
Sun Wei, professor at the School of Electronics and Information Engineering, Sun Yat-sen University, recently said that the energy-hungry virtual currency mining had aroused high vigilance among government departments in Sichuan and other places.
Sun also said that crypto mines are the bottomless pit of energy. They consume vast amounts of energy but cannot bring substantive innovation, economic benefits, and social value to the local area.
Miners in Sichuan primarily utilize hydropower to run the specially designed computer equipment used in verifying bitcoin transactions, more environment-friendly than coal-based Inner Mongolia.