In the latest news, Colin Wu, a Chinese journalist covering everything about the crypto world, recently tweeted about China’s plan to restrict energy-consuming projects. This new measure, while aimed to conserve energy, might harm the Bitcoin mining industry.
During Politburo’s 29th joint study session of the CPC Central Committee, Xi Jinping, a Chinese politician, communicated his plan of maintaining a harmonious coexistence between nature and man. In these plans, the Chinese government will restrict the projects that consume a considerable amount of energy.
Xi Jinping, the head of the Chinese Communist Party, vowed to reduce the country’s carbon emission and footprint. According to his statement, any project that consumes extra-large power will be “resolutely banned” if they do not conform to the standards that will be implemented in the future.
What will be the repercussions of this decision?
China is the biggest bitcoin hash rate consumer, which means this decision will definitely affect bitcoin’s price and the subsequent industry.
Mining farms require a large amount of energy to power the machines and maintain the server. This energy is generally generated by coal-powered power plants, which emit a significant amount of carbon residue in the environment.
The country alone contributes to above 75% of global bitcoin operations, according to a report in 2020. This number is expected to peak in 2024, which concerns the authorities because of its direct correlation with environmental pollution.
Suppose the crypto mining industry does not restrict the use of coal-based power or use alternative sources of energy. In that case, they might have to limit their processes which will cause a significant shift in the price of Bitcoin and other cryptocurrencies.
Several mining farms have already been choosing alternative energy sources such as solar energy and hydroelectricity to power their crypto mining farm. Some of the companies have been shifting their bases to countries with lower electricity costs.
While this news changes the dynamic of the crypto world, we are hopeful that the mining farms in China will implement the regulations or find an effective workaround that will not negatively affect the crypto industry.