China is taking aim at some Bitcoin miners and will be limiting the electricity available to them. The country is home to some of the largest Bitcoin miners in the world, as well as to their power consumption.
The process of Bitcoin mining, in which computer networks are used in order to solve challenging math problems in exchange for digital coins, requires an astounding amount of electricity. The cryptocurrency requires the computer networks to continue their operation in order to ensure the transactions can continue to occur.
This has become quite a challenge within the industry as the annual demand has been measured to be equivalent to entire countries. In 2017, the amount of energy consumed for the purpose of Bitcoin mining was estimated to be equivalent to the annual power needs of Bulgaria.
The People’s Bank of China Pulls the Plug
China already shut down all cryptocurrency exchanges at the end of last year, as well as halting any future initial coin offerings. Now, the People’s Bank of China, the national bank, has intentions to curb the power usage of Bitcoin miners in the country as well. As of yet, the finer details of the national bank’s plan for cutting back on power consumption by the Bitcoin miners has not been revealed.
The worry is that Bitcoin miners are abusing their access to lower electricity prices in certain areas. This has impacted the normal electricity usage within those areas in certain cases, say their reports. Local officials have been requesting investigations into the spikes in power consumption as a result of the cryptocurrency market.
The power consumption restrictions will involve the national bank, the government as well as additional regulators such as the National Development and Reform Commission, which is responsible for power supply oversight.
How This Impacts Bitcoin
Though it isn’t likely that the power restrictions on Chinese Bitcoin miners will impact transaction speeds in any noticeable way, it has raised other concerns. For example, it places the spotlight on worries associated with power consumption by Bitcoin miners, which is an issue affecting the entire world, not just China.
At the moment, the Bitcoin mining industry is consuming the equivalent amount of electricity to 3.4 million American households, said the Digiconomist Bitcoin Energy Consumption Index. As many of the largest Bitcoin miners in the world live in China, the strain has been significant in that country, particularly on the grid powered by the Sichuan and Yunnan province hydroelectric facilities.