China is working to crack down on Bitcoin mining, according to a government cabinet announcement three days after regulators confirmed their ban on digital tokens in financial transactions, which could lead to increased pressure on the cryptocurrency industry after the global sale last week.
The government has been cracking down on Bitcoin mining and commercial behavior, and resolutely prevent the transfer of individual risks to society, according to a statement issued by the Financial Stability and Development Committee of the State Council headed by Vice Premier Liu He, the chief representative of the Chinese president for economic and financial affairs.
China is the world’s largest cryptocurrency mining site, accounting for 65 percent of the Bitcoin hash rate, a unit of processing power that the Bitcoin network uses to verify transactions and mine new tokens for cryptocurrency, according to estimates by the Cambridge Bitcoin Index of electricity consumption.
The government, which has banned financial transactions of Bitcoin and other tokens since 2019, has turned a blind eye to cryptocurrency mining farms in Inner Mongolia, Sichuan, Xinjiang and other locations so far.
The chief researcher at the Shanghai Academy of Social Sciences said: The drafting of the statement did not leave much room for cryptocurrency mining.
However, the latest statement did not reach the point of a complete ban on cryptocurrency mining, nor did it go into detail about the measures involved in this campaign or its size.
Bitcoin prices fell by as much as 20 percent to $ 33,550 after the commission’s statement, before rising to $ 37,500.
The volatility of cryptocurrency prices has been exacerbated recently by comments from billionaire businessman Elon Musk, CEO of electric car giant Tesla.
The latest initiative against Bitcoin mining came after three state-backed Chinese financial societies issued a joint warning about the risks posed by volatile cryptocurrencies earlier this week.
However, some miners appeared confident that Beijing’s rhetoric is greater than its actions, as cryptocurrencies are still being sold in the country.
When all mining activity is banned in China, it will be a fateful turning point for Bitcoin, as much of its processing power is squeezed out of the picture.
The State Council Committee statement highlighted the green transformation of development, which represents the central government’s commitment to meeting the goals of clean energy and reducing carbon emissions.
Cryptocurrency mining requires massive amounts of electricity to run the large computer server arrays needed to perform the complex calculations required for cryptocurrency transactions, as well as to condition the air needed to cool these facilities.
The Chinese central bank was promoting its own digital currency, CBDC, and it should not be confused with cryptocurrencies, as the digital yuan is a digital currency issued by the People’s Bank of China, and is equivalent to the value of banknotes and coins in the country.
Chinese financial institutions, which are banned from dealing with transactions involving cryptocurrencies, are adopting the digital yuan.
Many local and regional governments in China have already cracked down on cryptocurrency mining facilities.
Earlier this week, northern China’s Inner Mongolia – one of the major sites for cryptocurrency mining due to low electricity prices – called for more comprehensive reports on these companies to phase out energy-consuming activities in the region.
Bitcoin mining uses about 121.36 terawatt hours per year, which is greater than the total energy used by Argentina.
The heavy consumption of Bitcoin mining conflicts with China’s pledge to reduce carbon dioxide emissions by at least 65 percent by 2030, compared to 2005 levels, and thus achieve carbon neutrality by 2060.