[Global Issue+] The Biggest Obstacle to China's Carbon Neutrality, 'Bitcoin Mining Farms'

1.3 Billion Tons Emitted Only from Bitcoin Mining Sites
Regulations to Ban Mining Begin in Neimenggu, Xinjiang Uygur, and Other Regions

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] As the Chinese government has announced a carbon neutrality goal to reduce carbon emissions to zero by 2060 in line with carbon emission regulations from major countries including the United States, Bitcoin mining farms have been identified as the biggest obstacle. It is known that over 60% of the world's Bitcoin mining farms are concentrated in China, and the massive electricity consumption used in the mining process is causing enormous carbon emissions. As local Chinese governments begin to actively regulate these mining farms, it is expected to have a significant impact on the cryptocurrency market in the future.

China Accounts for Over 60% of Global Bitcoin Mining

[Image source=Reuters Yonhap News]

According to cryptocurrency specialized media CoinDesk on the 1st (local time), the local governments of Inner Mongolia Autonomous Region, Xinjiang Uygur Autonomous Region, and Sichuan Province, where the largest Bitcoin mining farms in China are concentrated, have simultaneously announced that they will halt Bitcoin mining operations and launch comprehensive investigations, initiating large-scale regulations. As a result, there are concerns that the production of hash rate (the total computing power mobilized on the network) for Bitcoin mining will face significant disruptions. It is known that the hash rate within China accounts for more than 65% of the global total hash rate.

The reason the Chinese government has taken a strong regulatory stance is reportedly due to a coal mine accident that occurred on the 10th of last month in the Xinjiang Uygur Autonomous Region. The accident happened as a result of production overload at thermal power plants and coal mines caused by a surge in electricity demand within the autonomous region, according to Chinese authorities. A major factor behind this surge in electricity demand is the Bitcoin mining farms.

Accordingly, the Chinese government has suspended all coal mine operations in the Xinjiang Uygur Autonomous Region and initiated safety inspections. Alongside this, the local governments of Xinjiang Uygur, Inner Mongolia Autonomous Region, and Sichuan Province have declared that they will halt and close all Bitcoin mining operations. Since the end of last month, Bitcoin mining farms have reportedly been rushing to relocate to other regions. During this period, concerns have arisen that Bitcoin mining output could drop by more than 30%, which has contributed to the recent sharp decline in Bitcoin prices.

Emissions from Chinese Mining Farms Exceed Combined Emissions of the Netherlands and Spain

[Image source=AP Yonhap News]

There is growing demand within the Chinese central government to significantly strengthen regulations on Bitcoin mining. According to Chinese local media such as Sina, a recent paper published on the 7th in the latest issue of the academic journal Nature Communications, co-authored by the Chinese Academy of Sciences, Tsinghua University, Cornell University in the U.S., and the University of Surrey in the U.K., warned that if Chinese authorities do not strictly limit cryptocurrency mining including Bitcoin, it will hinder climate change countermeasures.

The paper states that if the current trend continues, electricity consumption for Bitcoin mining in China will peak at 297 terawatt-hours (TWh) in 2024, emitting up to 130 million tons of carbon dioxide. The 297 TWh is an enormous amount exceeding the annual total electricity consumption of Italy and Saudi Arabia combined. The 130 million tons of carbon dioxide emissions surpass the combined annual greenhouse gas emissions of the Netherlands, Spain, the Czech Republic, and Qatar.

The paper warns, "Without appropriate intervention and feasible regulatory policies, the Bitcoin blockchain operations concentrated in China will rapidly expand to the extent that they could nullify China's efforts to reduce carbon emissions." It emphasizes the need for much stronger regulations than currently in place. There are also concerns that if the Chinese government enforces stringent regulations similar to India, which imposes fines just for holding cryptocurrencies to achieve carbon neutrality goals, the cryptocurrency market could experience significant volatility.

This content was produced with the assistance of AI translation services.