The drop in the hash rate is equal to just over 2%due to the new restrictive measures. State Grid, the state energy company, calls for expanding the ban to the rest of the country.
The provinces of Henan, Gansu, and Anhui have opted for banning the mining of bitcoin and other cryptocurrencies in their area. This decision is to reduce electricity consumption. In this way, they join the other five territories in this nation that had previously prohibited this activity. Other provinces would do the same in the short term.
The news came from a local media outlet in Anhui, a region in eastern China with 60.3 million inhabitants. Regarding this territory, the Hefei Online portal details that the electricity demand in the province could surpass supply in 2022, so this is why measures of this type would prevent an energy crisis.
Henan and Gansu are now on the list of the provinces that banned Bitcoin mining. In addition, other jurisdictions of the remaining 14 in the country could follow the same steps.
According to data provided by the University of Cambridge, the current Bitcoin Electric Consumption Index, as of April 2020, Gansu had 2% of the processing power of all of China. Meanwhile, Henan gathered a figure marked at 0.08% of the hash rate, and Anhui had 0.04%. This data shows that, despite being widely populated areas, their contribution to the country’s total mining power barely surpasses 2%.
China Gradually Expels Bitcoin Miners
The provinces that have already banned mining are Inner Mongolia, Xinjiang, Qinghai, Yunnan, and Sichuan (although only in its largest city, Ya’an). A country that once showed excellence for this business thanks to its hydroelectric dams and the capacity of its energy distribution network, today has become a place from which miners migrate little by little.
Cryptocurrency mining revolves around solving mathematical problems to authenticate transactions on the blockchain. This continuous activity generates new cryptocurrencies. For this event to happen, specific equipment, processors, and graphics cards demand considerable energy consumption.
It is precisely for this reason that many states set limits on this activity in their territory, especially in those where this type of energy is scarce. Others, meanwhile, argue an alleged environmental impact of mining to limit it, even though some analysts state that it is not a harmful activity.
State Grid, The energy Provider that Calls for Ban Mining
One of the first causes of the ban on bitcoin mining in China is State Grid, the state-owned electric power distribution company. The reason is the shortage of electricity in various provinces of the country, such as Anhui.
In this way, according to the journalist Wu Blockchain, State Grid would have asked the national government to set a limit to the activity throughout the country.
By: Jenson Nuñez