*The Inner Mongolia region of China plans to ban new cryptocurrency mining projects and end existing activities in an attempt to reduce the energy consumption operation.
*Bitcoin mining consumes about 128.84 terrawatt hours per year of energy, more than entire countries like Ukraine and Argentina.
*Inner Mongolia alone accounts for about 8% of all bitcoin mining globally, more than the United States, which accounts for 7.2%.
GUANGZHOU, China – China’s Inner Mongolia region plans to ban new cryptocurrency mining projects and end existing activities in an attempt to reduce energy consumption. Bitcoin is based on a decentralized network, which means that it is not issued by a single entity, such as a central bank.
The transactions, recorded in a public ledger called blockchain, need to be “verified” by the miners.
These miners operate custom-made computers to solve complex mathematical puzzles that effectively allow a bitcoin transaction to take place.
Miners receive bitcoin as a reward and that’s the incentive. But since computers are high powered, they consume a lot of energy.
Bitcoin mining consumes about 128.84 terrawatt hours per year of energy – more than entire countries like Ukraine and Argentina, according to the Cambridge Bitcoin Electricity Consumption Index, a project from the University of Cambridge.
China accounts for about 65% of all bitcoin mining globally – Inner Mongolia alone accounts for about 8%, due to its cheap energy.
In comparison, the United States accounts for 7.2% of global bitcoin mining. However, not all cryptocurrencies work like bitcoin.
Inner Mongolia, located in northern China, failed to meet the goals of the central government’s assessment of energy use in 2019 and was rebuked by Beijing. In response, the region’s development and reform commission outlined plans to reduce energy consumption.
Part of these plans involves closing existing cryptocurrency mining projects by April 2021 and not approving any new ones.
They also involve the revaluation of other energy-intensive industries, such as steel and coal. Although the Chinese government supported the development of the underlying blockchain technology of bitcoin, it sought to crack down on digital currencies themselves. In 2017, Beijing banned initial coin offers, a way to issue digital tokens and raise money. The government also cracked down on companies involved in cryptocurrency operations, such as exchanges.
China is also striving to become more environmentally friendly. President Xi Jinping said last year that the country aims to peak carbon dioxide emissions by 2030 and carbon neutrality by 2060.