China Probing Bitcoin Mining Energy Use

Officials in China’s capital of Beijing are conducting examinations of data centers involved in “cryptocurrency mining” to “better understand their impact on energy consumption,” according to a Reuters report.

Although the report refers to cryptocurrency at large, it is well known that China-based companies contribute the majority of bitcoin mining hash rate, controlling over 70% of the network’s total hash rate and consuming a significant amount of energy, according to this map from the Cambridge Bitcoin Electricity Consumption Index.

Per the report, “The Beijing Municipal Bureau of Economy and Information Technology on Tuesday sent an ‘emergency notice’ to the city’s data centre operators to report if they’re involved in bitcoin and other cryptocurrency mining businesses. If so, they need to report the amount, and share, of power consumed by cryptocurrency mining.”

The “emergency notice” arrives following recent news that Inner Mongolia intends to ban all cryptocurrency mining projects within the region, on the grounds of energy consumption concerns. And it comes in addition to emergency blackouts initiated by the government earlier this month, which likely impacted the Bitcoin network’s overall hash rate.

With so many adverse events happening in the Chinese bitcoin mining industry, it begs the question of whether the country will maintain its hash rate domination. Indeed, Babel Finance’s Flex Yang wrote for Bitcoin Magazine earlier this month bringing this very question to the forefront of discussion.

“The Asian mining industry’s glory days as the top player are now being challenged by Western newcomers,” Yang wrote. “Although China is home to the most powerful mining machines and largest mining farms, Chinese Bitcoin infrastructure is at a crossroads in its development.”

How can a country that appears increasingly opposed to this massive industry sustain its dominance? That remains to be seen, although current access to low-cost energy maintains the status quo of Chinese bitcoin hash rate superiority.