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Chinese Authorities Order Sichuan-based Crypto Miners to Shut Down Operations

Published June 19, 2021 | Updated June 19, 2021

Chinese Authorities Order Sichuan-based Crypto Miners to Shut Down Operations

On Friday, June 18, Chinese authorities intensified their crackdown on crypto mining activities in the Southwestern Sichuan province. The authorities issued the notice to local miners to shut down their operations on an immediate basis.

As reported by Reuters, the joint notice came from The Sichuan Provincial Development and Reform Commission, and the Sichuan Energy Bureau. The authorities have asked nearly 26 suspected Sichuan-based crypto mining projects to shut down their operations by Sunday, June 20.

Sichuan is the second-biggest Bitcoin mining province in the world. Miners usually move their operations in Sichuan during the rainy season to benefit from the region’s abundant and cheap hydroelectric power.

The notice from regulators also asks state electricity companies in Sichuan to conduct due inspections and report it to the authorities at the earliest possible time. The authorities have asked to immediately stop the electricity supply to crypto mining projects. Besides, they have also asked the local government of Sichuan to initiate strict measures to shut down the existing operations and ban the new ones.

China’s countrywide Crackdown Gains Momentum

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Just within few weeks of passing the law banning crypto mining activities, China has intensified its crackdown on key crypto mining provinces. Apart from Sichuan, authorities have initiated similar measures in other mining regions like the Inner Mongolia Autonomous Region, the Xinjiang Uygur Autonomous Region, and the Qinghai province.

Reportedly, Chinese authorities have cited that crypto mining projects used electricity generated from highly polluting resources like coal. However, the Sichuan region largely uses hydroelectric power which indicates that the Chinese crackdown on crypto mining extends beyond the reasons of carbon footprint. Speaking to Reuters, Winston Ma, NYU Law School adjunct professor and author of the book “the Digital War” said:

“Renewable power does not help. The four largest mining regions – Inner Mongolia, Xinjiang, Yunnan and Sichuan – have implemented similar crackdown measures, even though mining in the latter two are mostly based on hydropower, whereas the first two are on coal”.

Considering that China accounts for more than 50% of the global crypto mining activities, the latest regulatory action has crashed the Bitcoin hashrate by more than 30% over the last months. This happens as several miners have turned offline unplugging their mining rigs.

Most of the Chinese miners are relocating their operations to overseas markets like North America. The U.S. State of Texas and Florida’s Miami city are currently wooing these miners by offering low-cost electricity incentives. Simultaneously, these states are also working out ways to move towards renewable mining solutions by tapping the region’s natural energy resources.

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Disclaimer
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
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Bhushan Akolkar 630 Articles
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
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