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There are already 8 provinces in China where bitcoin mining has been banned

Key facts:

The drop in the hash rate is equivalent to just over 2% with the new restrictive measures.

State Grid, the state energy company, calls for expanding the ban to the entire country.

The Chinese provinces of Henan, Gansu and Anhui have decided to ban the mining of bitcoin and other cryptocurrencies in their territory, in order to reduce electricity consumption. In this way, they join the other five territories in this country that had previously restricted this activity. Other provinces are expected to do the same in the short term.

The news was confirmed by local media in Anhui, a region in eastern China with 60.3 million inhabitants. Regarding this territory, the Hefei Online portal details that the province’s electricity demand could exceed supply in 2022, and that is why measures of this type are needed to prevent an energy crisis.

Likewise, a specialized journalist from that country known as Wu Blockchain confirmed the data to CriptoNoticias and added Henan and Gansu to the list of the provinces that prohibit mining. What’s more, other jurisdictions of the remaining 14 in the country could follow the same course, informs.

According to data provided by the University of Cambridge’s Bitcoin Electric Consumption Index, as of April 2020, Gansu had 2% of the processing power of all of China. Meanwhile, Henan accumulated 0.08% of the hash rate and Anhui had 0.04%. This means that, despite being widely populated areas, their contribution to the country’s total mining power barely exceeds 2%.

China gradually expels bitcoin miners

The provinces that had already banned mining are Inner Mongolia, Xinjiang, Qinghai, Yunnan, and Sichuan (although only in their largest city, Ya’an). Thus, what was once a country of 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 emigrate little by little.

As the CriptoNoticias Criptopedia explains, cryptocurrency mining consists of solving mathematical problems to validate transactions on the blockchain and allow the issuance of new cryptocurrencies. For this, specific equipment, processors and graphics cards are used that demand considerable energy consumption.

It is precisely for this reason that many States limit 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, despite the fact that some analysts argue that it is not a harmful activity in this sense.

State Grid, the energy provider that asks to ban mining

One of the main drivers 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 that occurs in some provinces of the country, such as Anhui.

Journalist Colin Wu reported that State Grid calls for a ban on bitcoin mining across China. Source: Twitter.

In this way, according to the journalist Wu Blockchain, State Grid would have asked the national government to restrict the activity throughout the country. CriptoNoticias contacted Wu, who claimed that this was an official communication addressed to the authorities, although it was not published openly.

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