China continues to pressurize
Since May 2021, China has launched virtual currency “mining” rectification activities. Inner Mongolia, Yunnan, Xinjiang, Qinghai, Sichuan, Anhui, Hebei, Jiangsu, Zhejiang, Fujian, Hainan and other provinces have successively shot.
On January 18 this year, Jin Xiandong, director of the Policy Research Office of the National Development and Reform Commission, said that positive progress will be made in preventing and resolving major risks in 2021. The rectification of the entire chain of virtual currency “mining” has achieved remarkable results.
In fact, China has been increasing the number of virtual currency “mining” clearing activities.
Multiple countries call for ban on BTC mining
It is worth noting that following China’s ban on virtual currency “mining” last year, national regulators including Russia and the European Union are also calling for a ban on energy-intensive crypto mining models.
According to Bloomberg, the Central Bank of Russia said in a report released on January 20 this year that cryptocurrencies have the characteristics of pyramid schemes, undermine the sovereignty of monetary policy and pose a threat to the Russian financial system. “The potential financial stability risks associated with cryptocurrencies are much higher in emerging markets, including Russia. This is due to the traditional preference for saving in foreign currencies and their lack of financial literacy,” the report said.
Russia’s central bank also said that the crypto mining industry undermines the country’s green agenda, jeopardizes Russia’s energy supply, and amplifies the negative effects of the spread of cryptocurrencies, creating an incentive for attempts to bypass regulation. Russia’s central bank’s tough stance against cryptocurrencies aligns with that of Russia’s security services, according to two people familiar with the matter. The security sector has also backed a domestic competition ban to prevent cryptocurrencies from being used to fund the country’s opposition.
The EU’s top financial regulator has renewed its call for a ban on the main mode of bitcoin mining across the EU, according to the Financial Times. Considering that PoW-based cryptocurrency mining is a highly energy-intensive business, Erik Thedéen, vice-president of the European Securities and Markets Authority (ESMA), recently proposed to ban the practice.
“We need to discuss how to move the industry to a more efficient technology. The solution is to ban PoW mining.”
Thedéen
As head of the Swedish Financial Services Authority (FSA), Thedéen also highlighted how crypto mining has become a “national issue.” He said: “The financial industry and many large institutions are now active in the cryptocurrency market and they have [environmental, social and governance, or ESG] responsibilities. As ESG concerns pervade the industry, many crypto miners have started using more renewable Energy. Bitcoin is now a national problem in Sweden due to the large amount of renewable energy used for mining.”
On January 10, the government of Kosovo announced that it would work to ban cryptocurrency mining in order to resolve the energy crisis. Kosovo Finance Minister Hekuran Murati said the decision to temporarily ban all cryptocurrency mining until further notice is correct given the country’s current energy crisis. It would be very unfair for my government to subsidize the profits of a few while burdening others. That’s why it was necessary to make this decision to temporarily limit the mining or production of cryptocurrencies so that ultimately more money can be saved for citizens. The reason is that as some people profit, the cost to taxpayers or their burden increases.
Additionally, on Jan. 19, the chairman of the U.S. Federal Trade Commission (FTC) similarly stated that the production of Bitcoin and Ethereum uses a lot of electricity.
A small number of countries support mining
Unlike other countries, the retail crypto mining industry in Thailand has been boosted by China’s crypto mining ban. Thai entrepreneurs and cryptocurrency businesses are increasingly utilizing mining machines processed by Chinese miners, Al Jazeera reported on Wednesday.
For example, industry entrepreneur Pongsakorn Tongtaveenan started a miner resale business in Thailand, where he reportedly sold hundreds of ASIC miners from China to small local investors. According to Pongsakorn, the price of equipment such as Bitmain’s Antminer SJ19 Pro plunged by 30% due to the withdrawal of Chinese miners, only to return to normal amid growing local demand. Pongsakorn believes that the growing popularity of retail crypto mining in Thailand is due to people seeking stable income during the pandemic and investors becoming more optimistic about the future of digital assets.
A hydroelectric power plant in Alvaro Murillo, Costa Rica, has also been given a new lease of life for cryptocurrency mining, with more than 650 miners from 150 customers running nonstop in eight containers. The containers are powered by a hydroelectric power plant located next to the Poas River.
In addition, mining businesses in the United States, Kazakhstan and other countries are also gradually emerging. According to a comprehensive cryptocurrency research report released by the University of Cambridge, as of April 2021, China’s share of the global bitcoin mining market has dropped from 75.5% in September 2019 to 46%. Kazakhstan’s hashrate has soared by a factor of five, with its share rising to 8.2% from 1.4% in September 2019. The U.S. hashrate share rose to 16.8% from 4.1% in September 2019. The top five countries in the global computing power are also Russia and Iran. As of the end of August 2021, the United States has the largest share of mining in the world, accounting for about 35.4% of the global hash rate, followed by Kazakhstan and Russia. The Chinese Bitcoin hash rate dropped to zero.