Guangzhou Targets Crypto Miners in Latest Anti-Crypto Drive

Bob Mason
Updated: Mar 9, 2022, 09:13 GMT+00:00

Crypto mining in China defies the government ban, forcing the government to order provinces to crack down on illegal mining activity.


Key Insights:

  • Beijing calls on provinces to crack down on crypto mining activity.
  • Seizures highlight underground mining activity in China that defy the government’s crypto mining ban.
  • NFTs and the Metaverse, along with Mining, are also the government’s focus areas.

The Chinese government and digital assets were back in the news overnight. Crypto mining was back in focus. In 2021, the government banned Bitcoin (BTC) mining.

The ban led to a relocation of Bitcoin miners to countries, including Kazakhstan and the United States.

Before the ban, China had been the leading Bitcoin mining nation, accounting for as much as 70% of the global Bitcoin hashrate.

Since the ban, Cambridge Centre for Alternative Finance data showed no Bitcoin mining in China by August 2021.

A shift in attention to crypto mining stems from an Energy crisis in Eastern Europe and rising government scrutiny in the U.S, which may have forced some crypto miners back to Mainland China.

Guangzhou Takes Aim at Crypto Miners

On Tuesday, news hit the wires of authorities in Guangzhou cracking down on crypto mining operations.

According to the report, authorities shut down a crypto mining operation, seizing 190 machines worth a reported CNY5m. Miners had worked under the premise of an electric vehicle charging station.

The mine had been in operation for more than 1,000 hours and had consumed more than 90,000 kilowatt-hours of electricity. The latest move against miners comes in response to orders from Beijing.

Last month, authorities sized 916 mining machines in Jieyang City, in Guangdong province.

Smaller mining operations have continued to operate despite the ban that has forced mining farms overseas.

According to one report, more than 100,000 crypto mining IP addresses were active daily in November 2021. The research identified the miners mainly distributed in Guangdong, Jiangsu, Zhejiang, and Shandong Provinces.

Chinese Government Focus Extends Beyond Mining

On Tuesday, China issued a stern warning to cybercriminals targeting NFTs and the Metaverse. The Supreme People’s Procuratorate (SPP) talked of severe retribution for those undertaking illicit activity, including money laundering and fundraising.

Updates from China’s Two Sessions highlighted growing concerns over the Metaverse, with political party members talking of the need for appropriate regulations.

The shift in focus to the Metaverse comes in response to a surge in Metaverse-related trademark applications. In China, Metaverse-related trademark filings reportedly reached 16,000 by late February.

While increased regulatory oversight of the Metaverse is inevitable, crypto miners will need to become more resourceful.

Talk of banning Proof-of-Work mining in the U.S and the EU could force more miners back to mainland China. Such an eventuality would give authorities greater incentive to shut down miners once and for all.

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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