China’s Inner Mongolia region plans to ban new cryptocurrency mining projects and shut down existing activities in an effort to reduce energy consumption.
Bitcoin is based on a decentralized network, which means it is not issued by a single entity such as a central bank. Transactions recorded on a public ledger on the blockchain need to be verified by “miners. These “miners” use specialized computers to solve complex mathematical puzzles in order to efficiently conduct Bitcoin transactions. “Miners are rewarded with bitcoins.
However, because the computers are so powerful, they consume a lot of energy.
The Cambridge Bitcoin Electricity Consumption Index shows that bitcoin mining consumes an estimated 128.48 megawatt hours of energy per year, more than countries like Ukraine and Argentina consume in an entire year.
China accounts for about 65% of all bitcoin mining worldwide, while Inner Mongolia alone accounts for 8% due to its cheap energy. By comparison, the United States accounts for 7.2% of global bitcoin mining.
However, not all cryptocurrencies work like that.
Inner Mongolia, located in northern China, has been criticized by Beijing for failing to meet the 2019 central government’s assessment targets regarding energy use, according to the financial television network CNBC. In response, the region’s Development and Reform Commission has developed plans to reduce energy consumption.
Part of those plans involve shutting down existing cryptocurrency mining projects in April 2021 and not approving any new ones. The plan also involves re-evaluating other energy-intensive industries, such as steel and coal.
While Beijing supports the development of bitcoin’s underlying blockchain technology, it is the digital currency itself that it wants to crack down on. in 2017, Beijing banned the issuance of initial tokens, a way to issue digital tokens and raise money. The government has also cracked down on businesses involving cryptocurrencies, such as exchanges.
On the other hand, China has also set environmental development goals. Chinese President Xi Jinping said last year that China aims to reach peak CO2 emissions by 2030 and become carbon neutral by 2060.
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