China Set to Regulate Bitcoin Mining over Effects on Carbon Footprint
China may be making plans towards increasing regulations in crypto mining. This comes after concerns about the effects of Bitcoin mining on the carbon footprint.
China’s crypto miners may be looking towards strict supervision when mining in the future. This comes after the government is allegedly concerned over the high amounts of energy consumed during Bitcoin mining.
On April 27, Beijing made an announcement in which it issued a directive for investigation on data centers that are involved in Bitcoin mining and other crypto mining activities. This announcement caused uncertainly in China.
Not Cause for Alarm
However, even with these reports and concerns, prominent Chinese participants in the crypto industry have stated that it is not a cause for alarm. Wu Blockchain, a Twitter analyst for the crypto market in China, has strongly refuted the claims that the Chinese government was only performing an investigation. He added that data centers are not used in Bitcoin mining.
This caused some panic in China. However, the Chinese government said it was only conducting an investigation. Data centers are difficult to use for Bitcoin mining, and are mainly used for ETH Filecoin.
— Wu Blockchain (@WuBlockchain) April 29, 2021
A media publication by PengPai also affirmed that the investigation was a regular routine of the Beijing Municipal Bureau of Economy and Information Technology. The bureau did this to get a clearer image of the energy consumed from mining operations from data centers based in Beijing.
It is not yet clear whether the checks will be conducted at the national level and the future impact of the same. However, the effects of blockchain mining on the carbon footprint will need future supervision.
Concerns over Crypto mining
The high-energy consumption by crypto miners has been a significant cause for alarm around the world. Mongolia recently gave miners until April 30 to shut down operations as China seeks to reduce its carbon emissions. While Beijing is not a central hub for crypto mining because of the high cost of energy, it may still be targeted in the future.
If strict supervision on Bitcoin mining is imposed, it may harm Bitcoin’s prices. Some analysts have attributed the April 17 Bitcoin price dip to a reduction in Xinjiang’s hashrate resulting from power outages. Bitcoin had earlier this month dropped to below $50000, and this caused a market panic.
Another prominent crypto analyst on Twitter, Willy Woo, also stated that an investor who had inside knowledge of what was happening in China had disposed of his crypto before mining pools were put under a temporary shut down after the drop in hashrate. Over 9000 Bitcoin was transferred to Binance after the shutdown.
9,000 BTC in, before the crash
20,700 BTC out, after the crashI wonder if that’s the same whale? pic.twitter.com/XrS3cwyTDw
— Willy Woo (@woonomic) April 19, 2021