Inner Mongolia, the autonomous region of China, plans to terminate current and future cryptocurrency mining projects around the area as part of its attempt to reduce energy consumption.
On February 25, the Inner Mongolia Development and Reform Commission released an online draft of its 2021 plan to cut back on the consumption of energy. The new policy aims at regulating energy use per unit of GDP by 3 percent in industries like methanol production, steel, as well as cryptocurrency mining.
A few weeks before the announcement of the new policy, the National Development and Reform Commission of the People’s Republic of China declared that among all the other provinces in the country, Inner Mongolia was the only one unsuccessful in conserving energy in 2019. The commission pointed out that the region failed to achieve the energy use requirements set by the central government.
This is in line with China’s goal to become more environmentally friendly in the next decade. In an address to the United Nations General Assembly, President Xi Jinping declared that China aims to peak carbon dioxide emissions by 2030 and make the country carbon neutral by 2060.
Because of its inexpensive energy, Inner Mongolia has attracted numerous businesses that operate on an intensive amount of power.
According to Cambridge University’s compilation of Bitcoin Electricity Consumption, China accounts for 65% of the global computing power of Bitcoin mining, with 8% from Inner Mongolia alone. The institution revealed that 128.84 terawatt-hours per year of energy has been spent on Bitcoin mining.
The release of the latest regulation has brought unease in the industry, evoking fears that the government will impose further limitations on the operations of crypto.
In 2017, Beijing prohibited initial coin offerings and cryptocurrency tradings in its jurisdiction, which forced many businesses to relocate overseas.
Although China has restricted cryptocurrency exchanges as well as the use of yuan in certain platforms, individuals can create accounts and engage in trading using cryptocurrency pairs like Bitcoin and the stablecoin Tether.
Huang Mengqi, a lawyer at Beijing DHH Law Firm, stated that the government’s mishandling of cryptocurrency businesses established overseas could lead to possible risks in the country.
‘You can’t stop people from trading Bitcoins because Chinese law recognizes the value of virtual assets. Anything of value should be able to change hands,’ Huang told Reuters.
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