In a move to fulfill its commitment to the world's carbon emission target at the UN General Assembly in 2020, China’s Inner Mongolia demands that all cryptocurrency mining in the region be immediately eliminated or phased out by April 2021.
The Chinese journalist, whose Twitter handle is “Wu Blockchain,” broke the news by tweeting:
“Breaking: China's Inner Mongolia is demanding that all cryptocurrency mining projects be cleared by the end of April. Due to China's commitment to the world's carbon emission target in 2020, the mining of thermal power in Inner Mongolia and Xinjiang will be greatly affected.”
Carbon neutrality has become one of China's highest political priorities. The nation has to peak CO2 emissions by 2030 and aims to achieve carbon neutrality by 2060. China’s commitment to carbon neutrality goals will affect thermal power mining in Inner Mongolia and Xinjiang.
Inner Mongolia, The Industry’s Favourite Mining Spot
The autonomous region of Inner Mongolia is clustered with large coal mines, attracting investment from power-intensive sectors such as aluminum and ferro-alloy smelting over the past decades. It’s a favourite in the crypto industry because of its cheap power.
Mining bitcoin is extremely energy-intensive, and the Inner Mongolian region accounted for 8% of global Bitcoin mining computing power as per the Bitcoin Electricity Consumption Index compiled by Cambridge University. China overall had over 65% of the network’s total, thanks to the attractive offer of inexpensive electricity, local chipmaking factories, and cheap labour.
Draft Policy To Regulate Energy Consumption In Region
China’s top economic planner, the National Development and Reform Commission, criticised Inner Mongolia to be the only province to fail to control its energy consumption in 2019. The draft policy was released weeks later (February 25th) on the Inner Mongolia Development and Reform Commission’s website, designed to restrain growth in the region's energy consumption to 1.9% in 2021.
While this is still a government draft, the possibility of the policy being overturned is not looking great as the highly suppressed region has a negative attitude towards the cryptocurrency mining industry. Hence, the most number of policy changes on cryptocurrency mining comes from Inner Mongolia. In contrast, the other major mining provinces, Xinjiang, Sichuan, and Yunnan have not yet taken any action. Crypto mining projects will have to face the eventuality of moving out of the region.
Bitcoin Mining And The Energy Consumption Debacle
Bitcoin mining is a very energy-intensive business, with about 2/3rds of the people managing the network using fossil fuel-based energy to maintain computation. Since blockchain technology relies on a vast decentralised network of computers, substantial computational power is required leading to excessive energy use.
This is how the cryptocurrency part of blockchain technology has been designed. As more computers maintain the blockchain, the safer the network becomes. As bitcoin becomes more valuable, the computing power required increases, raising energy consumption, leading to more fossil fuel-based carnage to the environment.
The Energy Consumption Numbers
They are high! The effort miners put in to create the currency is presumed to be 160 quintillion calculations every second.
Alex de Vries, the Digiconomist website founder and an expert on Bitcoin, says this mammoth of a computational effort is the crypto’s Achilles heel in an interview with the BBC.
“If Bitcoin were to be adopted as a global reserve currency," he speculates, "the Bitcoin price will probably be in the millions, and those miners will have more money than the entire [US] Federal budget to spend on electricity.”
"We'd have to double our global energy production," he says with a laugh. "For Bitcoin."
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.