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End of the road soon for currency mining

By Zhang Zhouxiang | China Daily | Updated: 2022-01-12 07:45

China's top economic regulator announces it will intensify regulation over virtual currency mining on Nov 16, 2021. [Photo/IC]

The National Development and Reform Commission has decided to amend the directory of industrial structure adjustment.

According to a notice on its official website on Monday, it will add the "mining" of virtual currencies such as bitcoin to the list of production devices that lag behind the times and need sorting.

That means the mining of virtual currencies could soon be prohibited. Since May 2021, many provincial-level administrative regions have taken strict measures to curb mining activities as they consume too much energy while achieving no real benefits. The updating of the NDRC list could prove to be the last nail in its coffin.

According to the Cambridge Centre for Alternative Finance, by May 10, 2021, the average annual global power consumption because of bitcoin mining was 149.37 billion kilowatt-hours, more than that of Sweden and Ukraine and 26th in the world if treated as a nation.

China used to be a favorite of global miners-a Xinhua report in May 2021 even found a mining company that consumed 300 million kWh of electricity in 2020, equal to what 10 dairy production lines consume, but paid only 250,000 yuan ($39,238) in tax.

By closing mining lines, China will be honoring its pledge of peaking carbon emissions before 2030 and achieving carbon neutrality before 2060.

This way it will save electricity that can be used to improve people's livelihoods.

The move will also reduce risks for individuals. The prices of virtual currencies are always fluctuating. In February 2020, the price of bitcoin dropped to as low as $5,000; at the start of 2021, it was $60,000; in May 2021, it dropped again to $35,000.

This rise and fall gives rise to speculation, luring participants. A popular joke goes that almost every miner is losing money and the only ones making money in the process are the manufacturers of computers with high-end graphics cards, which are suitable for mining.

Once the bubble bursts, we hope the miners will invest in the real economy to create riches that benefit all.

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