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Chinese officials punished a hydropower facility in Hubei province in Central China 43,493 yuan ($6,528) for “illegally supplying electricity to virtual currency mining activities,” as the country continues to tighten down on cryptocurrency operations.
Profit and punishment
According to a penalty notice dated May 11 and posted last week by a local branch of the National Energy Administration, the authorities will collect profits of 21,747 yuan from selling electricity to crypto mining enterprises, in addition to the punishment.
In May 2021, China began a series of harsh crackdowns on cryptocurrency mining, culminating in a complete ban in September.
Underground mining activities, on the other hand, continue, with corporations finding new ways to avoid detection by the authorities.
According to research by the Cambridge Centre for Alternative Finance, China controlled 21.1 percent of the worldwide Bitcoin hashrate in January, making it the second-largest Bitcoin producer after the United States with 37.8 percent.
Many moving to offshore
While some crypto mining enterprises in China have gone underground, many others are moving their rigs offshore.
Mark Zhou, the company’s CEO, said his repair centers in southwest China’s Sichuan region and the southern city of Shenzhen have roughly 100 experts who handle about 20,000 mining rigs every month.
However, the majority of the equipment will be shipped to other nations.
Miners traveling to North America prefer newer machines, while those transferring to Central Asian countries like Uzbekistan and Kazakhstan prefer used rigs, according to Zhou.
Tight eye on suspected corruption
When it comes to local governments shutting down mining sites, Bitcoin miner Lee believes China’s business practice of guanxi (the culture of trading favors and leveraging relationships) plays a role.
Many local governments collaborated with miners to collect extra money that would go into government coffers before the mining prohibition went into effect, according to Lee.
After being accused of misusing his authority to encourage crypto mining activities, Xiao Yi, a former provincial-level official in the southeastern province of Jiangxi, was removed from office and expelled from the Communist Party in November.
Authorities are keeping a tight eye on suspected corruption behind underground crypto mining, according to the country’s anti-graft body, which warned in March. It was mentioned that certain government employees mine state resources.
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Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
