China’s Inner Mongolia region has proposed penalties for companies and individuals involved in cryptocurrency mining as the region appears to want more control over the activity.
The move comes after Chinese Vice Premier Liu He said last week in a statement that it was necessary to “suppress the behavior of Bitcoin mining and trading” to prevent “the transmission of personal risk to social spheres”. Those comments are seen as Beijing’s intention to further block Bitcoin trading and other crypto-related activities. Inner Mongolia’s latest draft proposals are aimed at telecommunications and internet companies involved in cryptocurrency mining. The Inner Mongolia Development and Reform Commission said such companies could have their business licenses revoked if they are found to be involved in Bitcoin mining. In addition, cloud computing or data centers may have their government incentives revoked. In addition, there are severe penalties for individuals involved in money laundering through cryptocurrencies. Inner Mongolia’s tough stance on crypto mining began in March after it announced plans to ban new crypto mining projects and shut down existing operations to cut consumption. energy. China’s Northern Region failed to meet Beijing’s energy use targets in 2019 and subsequently set out a plan to reduce power consumption. In the case of Bitcoin, miners purposefully use computers to solve complex mathematical puzzles that allow a Bitcoin transaction to take place efficiently. These miners are rewarded with Bitcoins. But because the computer has a large capacity, it consumes a lot of energy. According to the Cambridge Bitcoin Electricity Consumption Index, Bitcoin mining consumes around 112.57 terrawatt-hours (TWh) per year, more than the consumption of countries like the Philippines and Chile. China accounts for about 65% of the world’s Bitcoin mining. Of that, Inner Mongolia accounts for about 8% globally due to cheap energy prices, a larger share of Bitcoin mining in the United States. China’s tough stance towards cryptocurrencies is not new. China previously shut down local cryptocurrency exchanges in 2017 and that same year also banned initial coin offerings (ICOs). But Bitcoin trading continues to operate in China even though exchanges have moved overseas. Inner Mongolia’s scrutiny of Bitcoin mining activity in particular comes as China tries to continue the move. Chinese President Xi Jinping said last year that China has set a goal of becoming carbon neutral by 2060. But according to a study published in Nature Communications in April 2021, Bitcoin mining could “undermine emissions reduction efforts” going on in the country. The energy consumption of Bitcoin mining operations came back into focus in early May after Tesla CEO Elon Musk said the electric carmaker would stop accepting the digital currency for the reason due to environmental concerns. On Monday (May 24), Musk said in a tweet that he has met Bitcoin miners in North America and that they are “committed to announcing current and planned uses of renewables.”
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