It’s about to get even harder to mine cryptocurrency in China. The Financial Times reports that the Inner Mongolia Development and Reform Commission (IMDRC) plans to set up a hotline for reporting suspected mining operations.
The report arrived shortly after Reuters reported that China banned financial institutions from offering “clients any service involving cryptocurrency, such as registration, trading, clearing and settlement,” ostensibly to curb speculative trading.
But this isn’t the first time China has cracked down on the crypto market. Regulators attempted to assert more control over the market by banning initial coin offerings in 2017, for example, and in 2019 it considered a ban on the industry as a whole.
Inner Mongolia also said in February that it was banning cryptocurrency mining in a bid to reduce its power consumption. That would actually be a win for the environment; a study published by Nature (opens in new tab) in April said that Bitcoin mining in China alone would exceed Venezuela's carbon emissions by 2024.
Still, it wasn’t clear before how it planned to suss out mining operations that defied the ban. Now it seems we have our answer: The Financial Times said the IMDRC wants the hotline to help it “comprehensively clean up and shut down” any mining operations that have remained within the province despite the ban.
These efforts seem like the cryptocurrency mining equivalent to McCarthyism: Inner Mongolia has effectively made it so anyone can accuse someone else of mining crypto. Depending on how severely mining will be punished, it’s not hard to imagine the resulting investigation being a terrifying experience for the accused.
China’s latest crackdown on cryptocurrencies has reduced prices for Bitcoin, Ethereum, and other popular coins. While that might dissuade mining in the country for a while, it’s still a highly lucrative endeavor. It won’t be surprising if mining operations continue despite the risk of being snitched on by their neighbors.