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China Warns State Firms on Crypto Mining, Mulls Punitive Steps

China plans to crack down on industrial-scale bitcoin mining as well as any involvement by state companies, a spokeswoman said.

China Warns State Firms on Crypto Mining, Mulls Punitive Steps
Cryptocurrency mining machines. (Photographer: Christinne Muschi/Bloomberg)

China told its state-owned enterprises to stop cryptocurrency mining and said it’s considering punitive measures in the form of higher power prices on companies that defy the ban.

The National Development and Reform Commission plans to crack down on industrial-scale bitcoin mining as well as any involvement by state companies, Meng Wei, a spokeswoman, said Tuesday at a press conference. The chief economic planner held a special meeting on the issue last week and is putting a bigger onus on provinces and municipalities to investigate and clean up SOEs involved in mining.

Beijing has cracked down hard on bitcoin miners this year, blaming them for everything from energy waste to deadly coal mining accidents as the government strives to meet its carbon neutral goals. Concern over the country’s power supplies for the upcoming winter season was one reason for an intensified campaign against miners in September, when officials were said to have gone after those who tried to disguise themselves as data researchers and storage facilities. 

Since then, coal prices have collapsed, making the impact of punitive prices on the cost of electricity less clear.

China expelled a former Jiangxi provincial official for violations including supporting virtual currency mining, the Central Commission for Discipline Inspection said over the weekend. Xiao Yi was accused of abusing his power to introduce and support enterprises conducting such activities against government policies, as well as taking bribes, it said.

Bitcoin tumbled as part of a broader crypto dip, sliding almost 5% to $60,971.56 at 2:17 p.m. in Hong Kong. Ether fell as much as 6.8%. 

©2021 Bloomberg L.P.

With assistance from Bloomberg