China’s Ban on Crypto Mining Has Led to a 34% Decrease in Carbon Footprint Associated With BTC Mining

In 2021, China, the then world’s largest Bitcoin (BTC) mining hub, made a bold move. It banned all crypto-mining activities. That decision has profoundly impacted the global BTC mining landscape and its environmental effects. Per a BanklessTimes.com report, that ban led to a 34% decrease in BTC mining’s carbon footprint.

Prior to the censorship, China accounted for roughly 70% of the world’s BTC hashing power. But that shrunk to 21% in 2022. This fall coincided with a 13% cutback in the world’s BTC mining energy supply from coal. That, in turn, caused the reported drop in carbon emissions.

Impact of the Ban

According to BanklessTimes crypto expert Alice Leetham, China’s decision was a catalyst for more decentralized distribution of mining operations globally. She explained:

China’s crypto mining ban saw many miners relocate to countries with favorable renewable energy sources. And with their migration came a greener approach to cryptocurrency mining. This shift has not only diversified the geographic landscape of mining but also aligned the industry with more sustainable energy practices.

BanklessTimes crypto analyst, Alice Leetham

To illustrate her point, Leetham gave the example of Foundry, the largest BTC mining pool worldwide. She insists that the dwindling of China’s Bitcoin hashing power allowed such organizations with an ESG focus to step up their operations. According to the American firm, its members use up to 71% of green energy in mining.

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Reasons For China’s Crypto Mining Ban

China’s crackdown on crypto mining arose from three primary considerations. For starters, the activity’s massive energy demands, particularly in regions reliant on coal power, raised environmental concerns. BTC has attracted criticism for its massive carbon footprint, and the nation that is already a major emitter sought to cut that.

Additionally, Chinese regulators were uneasy about the risks associated with crypto assets. These are difficult to regulate due to their decentralized nature. Beijing feared that unscrupulous individuals would use them for illegal activities such as money laundering, trafficking, and funding terrorism.

Besides, their high volatility could destabilize the nation’s economy. China has long adopted a centralized and socially stable economic system. Cryptocurrencies, as stated earlier, are decentralized. As such, the Chinese government views them as a threat to its authority and control over its financial system.

While the ban has had its positive impacts, it has come with its challenges, too. One of these is the potential centralization in new mining locations. Leetham fears that the influx of miners into crypto-friendly regions could re-concentrate hashing power there. As such, the sector must acknowledge and address these concerns for its long-term sustainability.