According to the reports from Hong Kong, China is once again going against cryptocurrencies. Earlier, bitcoins were considered a threat to the country’s financial system, and therefore, China was looking forward to banning them. Now, it is aiming at cryptocurrency mining. The Chinese authorities consider cryptocurrency mining as very harmful because of its carbon emission, and it is considered to be jeopardising the country’s reducing carbon emission. Even though cryptocurrencies were thriving in China back in time, this is no longer a haven. In a press conference on Tuesday in Beijing, the national development and reforms commission spokesperson said that cryptocurrency mining requires a lot of energy consumption. Energy consumption is directly proportional to carbon emissions, and therefore, it has been a threat to the economy overall. Moreover, due to cryptocurrency mining, carbon emissions are increasing every day, and therefore, it is not for the country.
According to the reports, it is also confirmed that China is looking forward to enforcing the rule of state-owned business firms in the industry. According to the reports, Meng confirmed in a press conference by the NDRC – the country’s top economic planner- that it will launch a complete clampdown on cryptocurrency mining. On the contrary, the country will focus on mainly participating in commercial mining, further increasing the role of industries owned by the state. While aiming at mining, she also said that cryptocurrency production and trading is a considerable risk to the economy. Also, the thriving cryptocurrency industry is wholly blind and disorderly, making it very difficult for the financial system to regulate it at all costs.
As of now, China is looking forward to suppressing any cryptocurrency mining inside the country. Therefore, the NDRC told the press conference that it would take any possible measures to suppress cryptocurrency mining, and it may also include the increase of prices of electricity. It will impose hefty electricity charges on any firm wholly indulged in or participating in cryptocurrency mining. Any power consumption that leads to cryptocurrency mining will be charged with high electricity costs. Traditionally, the government offers electricity to some schools, public welfare institutions, community centres and much more electricity at a lower cost than the market prices.
Right after the remarks made by the NDRC from China, the bitcoin prices fell drastically. There was a near about 7% decrease of bitcoin prices to $60,889. It is the lowest value in the last week for the cryptocurrency bitcoin, and the reason for the same was not completely clear. It is said that it was the result of statements made by the authorities of China, while others believe that it has nothing to do with it. Also, not only did bitcoin experience a fall in its price in the last week, but the second-largest cryptocurrency named it had fallen by 8%. BTC prices on Tuesday close at $4297, which is the worst level of prices in the last two weeks.
It is not the first time China has aimed against cryptocurrency mining inside the country. Recently, in May, China banned cryptocurrency trading within its geographical boundaries and said that it would further impose restrictions on mining operations. According to the research done by Nature Communications, China is the Centre of more than 75% of the bitcoin mining in the whole world. Despite a massive decline in bitcoin prices, it will still be a perfect year for this digital coin. In 2021, bitcoin experienced an increase of about 110% and last week; it was recorded at the highest price of $69,000. You can understand more about bitcoin dominance here for more information on BTC.
There is not only one but two reasons because of which China aims against cryptocurrencies. The first one is the financial risk that cryptocurrencies can impose on the national control of the capital. Also, due to the increasing trend of cryptocurrencies in the country, authorities believe that it can further lead to carbon emissions which is not a good factor. As China is looking forward to controlling the carbon emission and making it neutral by 2016, Cryptocurrency mining can stand as a massive threat to the target. Apart from this, cryptocurrency requires a large amount of energy consumption, and China is already facing power shortages at some level. It has been affecting the power reasoning with a lot of households and factories.