The authorities chinese are intensifying the crackdown on mining in cryptocurrencies, referring to it as an “extremely harmful” practice that threatens the country’s efforts to reduce carbon emissions. With the comment, bitcoin dropped below $60,000 for the first time since November 1st.
National Development and Reform Commission spokesman Meng Wei attacked mining in bitcoin during a press conference this Tuesday (16) in Beijing. She said the activity “consumes a lot of energy” and “produces a lot of carbon emissions”.
Meng said the NDRC – the country’s biggest economic planner – will launch a “large-scale” crackdown on cryptocurrency mining, focusing on commercial mining and the role of state-owned companies in the sector. She also said that the production and trade of cryptography produced “prominent risks” and called the sector “blind and disorderly”.
As part of its new push, the NDRC said it would raise electricity prices for any institution that abused its access to subsidized energy to participate in crypto mining. Authorities traditionally offer schools, community centers or other public welfare institutions lower prices for electricity.
Bitcoin prices eased after the comments, dropping more than 5% to $60,835 at around 12:40 pm, its lowest in more than a week. While the reason for the dive wasn’t immediately clear, it coincided with the NDRC press conference. O Ether, the second-largest digital token after bitcoin, dropped more than 7% on Tuesday to $4,293 at the same time, the worst level in two weeks.
This is not the first time this year that Beijing has pledged to crack down on cryptocurrency mining.
The country has stepped up efforts to curb activity since May, when it banned trade in cryptocurrencies and said it would look into the country’s mining operations.
China was responsible for more than 75% of bitcoin mining worldwide, according to a survey published in the scientific journal Nature Communications in April. However, the country lost its position to the USA.
Despite the drop this week, bitcoin is still having an exceptional year. The cryptocurrency appreciated about 110% in 2021. Last week, it reached a record value of US$69,000.
China is targeting cryptocurrencies for a couple of reasons. Authorities see assets as a major financial risk and a way for people to escape tight national controls on capital, and they want to rein in such practices.
Restrictions on decentralized currencies like bitcoin also come as the government releases a digital version of the yuan, which would allow China’s central bank to exert more control over the flow and exchange of money.
Beijing is also trying to meet its climate goals of becoming carbon neutral by 2060, and cryptocurrency mining could threaten that. The practice is energy-consuming, as it requires machines to solve complex sets of algorithms to verify transactions. China is also struggling with a serious energy shortage, which has affected millions of families and factories with energy rationing.
The latest new effort to target mining will be “of great importance” to China’s goals of reducing carbon emissions and achieving carbon neutrality, Meng said at Tuesday’s news conference.
China must “strictly avoid [a mineração de criptomoedas] resurface from the dead ashes,” Meng said.
*(Translated text. Click here to read the original, in English)
Reference: CNN Brasil
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