Chinese government data collection center confirmed involved in Bitcoin mining

• The Chinese government sent an “emergency notice” to data centers to check if they have been involved in cryptocurrency mining.
• Beijing aims to better understand the impact of Bitcoin mining operations on energy consumption.
• A state official said that the notice was sent out to recipients, including the three largest telecommunications operators in the country. 

Although China's view of cryptocurrencies remains ambiguous, the Beijing government’s data center has been engaged in crypto mining activities.

Beijing investigates crypto mining energy consumption 

The Chinese capital city of Beijing has recently confirmed rumors as the state media revealed that Beijing's data collection center has been used for Bitcoin mining. According to the Chinese government, these data hubs were asked to give feedback on the power consumed for mining operations.

Earlier this week, the Beijing Municipal Bureau of Economy and Information Technology sent an “emergency notice” to data centers to report whether they have been involved in crypto mining businesses.

According to Chinese state media PengPai, data collection operators in Beijing were asked to provide information to better understand cryptocurrency mining’s impact on energy consumption. Centers were obligated to submit figures on electricity consumption in the past year.

An unidentified official of the bureau stated that the city’s authorities directed the probe. The notice was sent out to recipients including China’s three biggest telecoms operators. The country’s telecommunications industry is dominated by three state-run companies, including China Telecom, China Unicom, and China Mobile.

It has not been made clear whether the recent probe is part of a nationwide campaign or other data centers were also involved in cryptocurrency mining operations. 

Crypto mining to be more strictly regulated

Since the cryptocurrency mining process requires vast amounts of computing power, a great extent of electricity is needed. Certain Chinese regions, including Inner Mongolia, Sichuan, Yunnan, and Xinjiang, have been attractive mining zones due to low electricity prices. 

In March, Inner Mongolia said it would shut down all crypto-related mining projects by the end of this month to improve energy efficiency. 

According to a study published in Nature Communications in early April, energy consumption and carbon emission from Bitcoin mining could threaten China’s climate efforts. 

The country has accounted for over 75% of Bitcoin mining operations as of April last year. At this rate, the energy consumption from maintaining the BTC network operational is expected to reach roughly 297 terawatt-hours in 2024. Such a massive amount of energy used for crypto mining operations in China alone could generate 130 million metric tons of carbon emissions, according to a study from the University of Chinese Academy of Sciences, Cornell University, Tsinghua University, and University of Surrey.

The halt of mining operations in China due to a coal mine accident in Xinjiang earlier this month has led to a steep drop in hash rate. According to Igor Runets, CEO of BitRiver, the recent outage was an indicator of the unreliability of non-renewable sources and the centralization of mining in China.

As Northern American companies are looking into renewable-focused mining, more hash rate will be coming to this part of the world.  However, it would take a long time before North America could match China’s share of the Bitcoin hash rate.