A bitcoin mine near Kongyuxiang, Sichuan, China on August 12, 2016.
Paul Ratje | The Washington Post | Getty Images
GUANGZHOU, China – China’s Inner Mongolia region has proposed penalties for companies and individuals involved in mining digital currencies to further combat the practice.
The move comes after the Chinese Vice Prime Minister Liu. He said in a statement last week that it was necessary “to take action against bitcoin mining and trading behavior” in order to prevent the “transfer of individual risks to the social field”.
These comments were seen as Beijing’s intention to continue its four-year crackdown on bitcoin trading and other cryptocurrency-related activities.
Inner Mongolia’s recent drafts target companies such as telecommunications and internet companies involved in the mining of virtual currencies. The Inner Mongolia Development and Reform Commission said that such companies could have their business licenses revoked if found to be involved in mining.
Cloud computing or data centers may have preferred government support policies that are currently being revoked.
There are also stiff penalties for anyone involved in money laundering from fundraising campaigns using digital currencies.
Inner Mongolia’s tough stance on mining began in March after plans were announced to ban new cryptocurrency mining projects and halt existing activities to reduce energy use. The northern China region failed to meet Beijing’s 2019 energy consumption targets and has subsequently made plans to reduce electricity consumption.
In the case of Bitcoin, miners use specially designed computers to solve complex mathematical puzzles that effectively make a Bitcoin transaction possible. These miners are rewarded with Bitcoin.
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However, because the computers are powerful, they consume a lot of energy.
According to the Cambridge Bitcoin Electricity Consumption Index, a project by the University of Cambridge, Bitcoin mining consumes around 112.57 terawatt hours of energy per year, more than entire countries like the Philippines and Chile.
China accounts for around 65% of the world’s bitcoin mining. Because of its cheap energy, Inner Mongolia accounts for around 8% of the world, a larger proportion than the US
China’s tough stance on cryptocurrencies isn’t new. China closed the local cryptocurrency exchanges in 2017 and banned so-called Initial Coin Offerings (ICOs) in the same year. However, traders continue to operate in mainland China despite the fact that exchanges have moved to sea.
Inner Mongolia Bitcoin mining audit comes specifically when China is trying to go green. President Xi Jinping said last year the country is aiming for the highest carbon dioxide emissions by 2030 and carbon neutrality by 2060.
However, a study published in the journal Nature Communications in April said that bitcoin mining could “undermine emissions reduction efforts” that are taking place in the country.
Bitcoin mining energy usage was brought back into the spotlight earlier this month after Tesla CEO Elon Musk said the electric car maker would no longer accept digital currency for purchases, citing environmental concerns. It did after Tesla announced in a February regulatory filing that it had bought $ 1.5 billion of the cryptocurrency and gave customers the option to make purchases using Bitcoin.
On Monday, Musk said in a tweet that he had met with North American Bitcoin miners and that they had “committed to publicizing current and planned use of renewable energy”.
