A Chinese province has asked residents to blow the whistle on neighbours they suspect of being cryptocurrency miners, in a new sign of how authorities in the country are cracking down on the booming industry.
The Inner Mongolia Development and Reform Commission said that it would set up a telephone hotline through which people could report suspected mining outfits as part of an effort to “comprehensively clean up and shut down” these operations.
The development comes as concerns grow over a crackdown on bitcoin and other digital currencies in the world’s second-biggest economy. A warning from China’s central bank this week that they were “not real currencies” and that financial institutions should avoid using them was followed by a plunge of as much a 30 per cent in the price of bitcoin.
Bitcoin was trading down 1 per cent at $39,423 during European trading hours on Thursday, according to the Bitstamp exchange.
China’s regulatory approach to cryptocurrencies, whose prices have surged in recent months, has been more severe than other jurisdictions such as the US, which have remained comparatively open to institutional involvement.
Regulators “want to secure the money supply is always from the central bank, rather than from . . . cryptocurrencies”, said Ken Cheung, chief Asian FX strategist at Mizuho Bank.
The notice posted this week by the regional government of Inner Mongolia, a large province in northern China, comes after it earlier this year pledged to close cryptocurrency mines as part of wider targets to reduce energy consumption. Mining for cryptocurrencies is an energy intensive process by which computers solve mathematical problems in order to create more currency.
Scrutiny of bitcoin miners is part of an intensifying campaign to strengthen China’s environmental oversight, with the government using fines and heightened monitoring to help enforce President Xi Jinping’s goal of a peak in carbon dioxide emissions before 2030 and “carbon neutrality” by 2060.
Bitcoin mining has been accused of causing rising emissions. One estimate by Chinese academics published in the scientific journal Nature Communications in April found that, without policy intervention, bitcoin in China would generate 130m metric tonnes of carbon dioxide emissions by 2024, exceeding the total annual emissions of Venezuela.
Inner Mongolia is under extra pressure from Beijing to limit emissions after it approved more new coal-fired power plants in the last five years than any other province. Environmental activists consider China’s reliance on coal power its primary obstacle to reducing carbon emissions.
In September, Inner Mongolia officials were summoned by authorities in Beijing and warned that controlling energy use was of the “utmost importance”.
In February, Inner Mongolia’s government announced a plan to close all cryptocurrency mining projects in the province. That prompted many to move to southwestern provinces like Sichuan, where a larger portion of the energy mix comes from hydropower.
China’s pressure on cryptocurrencies gained momentum in 2017 when it closed the country’s bitcoin exchanges, which had previously accounted for the majority of global trading.