China broadens crackdown on crypto-mining industry

Chinese mines power nearly 80 percent of the global trade in cryptocurrencies despite a domestic trading ban since 2017.
Chinese mines power nearly 80 percent of the global trade in cryptocurrencies despite a domestic trading ban since 2017.PHOTO: REUTERS

BEIJING (AFP) - China has broadened a crackdown on its massive cryptocurrency mining industry with a ban on mines in a key south-western province.

Chinese mines power nearly 80 per cent of the global trade in cryptocurrencies, despite a domestic trading ban since 2017. But in recent months, several provinces have ordered mines to close as Beijing turns a sharp eye to the industry.

The authorities in the province of Sichuan ordered the closure of 26 mines last week, according to a notice widely circulated on Chinese social media and confirmed by a former Bitcoin miner.

The notice reportedly instructed power companies to stop supplying electricity to all cryptocurrency mines by Sunday.

It vowed a "complete clean-up" and ordered local governments to carry out a "dragnet-style investigation" to find and shut down suspected crypto mines.

The province represents one of the largest bases for mining in the country.

A former cryptocurrency miner told Agence France-Presse (AFP) news agency he had closed everything in recent days, in line with the requirements.

"There have been working groups coming to check... making sure we shut down operations and removed the machines," he said.

Sichuan, a mountainous region in south-west China, is home to a large number of cryptocurrency mines, which require a colossal amount of energy supplied by the province's cheap and abundant hydropower.

According to a report in the state tabloid Global Times, the closure of mines in the province has resulted in the closure of more than 90 per cent of the country's Bitcoin mining capacity.

Beijing has turned the screw on cryptocurrency miners to stamp out financial risks from speculation, although environmental concerns about the gas-guzzling mines is also a factor.

Chinese media reported that electricity supply to all crypto mines across the province was stopped at midnight on Sunday, as the topic trended on social media.

Sichuan is China's second-most intensive mining region after Xinjiang in the country's north-west, according to Cambridge University's Bitcoin Electricity Consumption Index.

All crypto mines in the sparsely populated but coal- and hydropower-rich regions of Inner Mongolia and Qinghai were also ordered to shut down in recent months, with citizens encouraged to report illegal mines.

Last month, the value of Bitcoin dived after three Chinese financial associations reasserted a ban on financial institutions offering cryptocurrency services, warning against risky speculation by cryptocurrency traders.

China is in the midst of a wide-ranging regulatory crackdown on its fintech sector, whose biggest players - including Alibaba and Tencent - have been hit with big fines after being found guilty of monopolistic practices.