Mongolia strengthens Beijing's ban on cryptocurrency mining

Mongolia strengthens Beijing ban on cryptocurrency mining - smog pollutionMongolia has stepped up its efforts to eliminate cryptocurrency mining with new regulations, which propose harsh punishments for anyone involved in the practice. A move that will accelerate the transfer of mining outside of China.

Zero tolerance

Targeting industrial parks, data centers, telecommunications companies, Internet companies and even cyber cafes, the draft law promises to punish bitcoin miners or those who provide resources to miners.

Under the new rules, people who violate the regulations could be placed on a blacklist that prevents them from obtaining loans or using the country's transportation system, as well as facing other legal consequences.

The draft marks a sharp escalation into an already startling shift in the central government's attitude towards bitcoin miners and comes less than a week after the Mongolian region called on citizens to report illegal bitcoin mines.

Although the creation and trading of cryptocurrencies such as bitcoin has been illegal in China since 2017 - a move that has forced exchanges like Binance, Huobi and OkEx to move offshore - authorities have until recently turned a blind eye to companies and individuals who They "undermine" bitcoin.

Miners who have taken advantage of cheap coal-fired electricity in places like Xinjiang, Sichuan and Mongolia are finding that this tolerance is about to end.

Restrictions to achieve environmental goals

China has set a goal, to achieve carbon neutrality by 2060 and to mine bitcoin, which uses 21,36 terawatt hours per year globally - more than the total energy used by Argentina, according to the Cambridge University - is now seen by the government as a major block to achieving that goal.

Furthermore, illicit coal mining that endangers human lives and makes climate goals even more difficult to achieve also played a role in the latest crackdown.

A government investigation into a coal mine accident in the Xinjiang Autonomous Region that trapped 21 people last month found that the mine was reopened without official permission to meet the growing demand from cryptocurrency miners.

According to Cambridge University's Bitcoin Electricity Consumption Index, Xinjiang accounts for nearly 36% of the global bitcoin hash rate. Sichuan and Mongolia are second and third respectively, giving China a 65% share of the global hash rate.

Between the increase in Chinese control and Tesla's recent decision (Tesla shares - ticker TSLA) to suspend bitcoin payments, prices had dropped to $ 39 at the time of publication from over $ 60.000 the previous month.

“We are seeing the cryptocurrency market follow a path to 'de-China-isation' - first on trading and now on computing power, based on a series of stronger measures taken against cryptocurrencies and bitcoin mining last year. week from Beijing, ”said Wang Juan, a professor at Xi'an Jiaotong University.