Beijing - China plans to limit power use by some bitcoin miners, people familiar with the matter said, a potential challenge to an industry whose energy-intensive computer networks enable transactions in the cryptocurrency.
The People’s Bank of China outlined the plan on Wednesday at a closed-door meeting, according to the people, who asked not to be identified because it wasn’t public. They didn’t detail how authorities plan to enact the curbs.
Chinese officials are concerned that bitcoin miners have taken advantage of low power prices in some areas and affected normal electricity use in some cases, the people said. Local officials have been asked to investigate the high consumption associated with the industry, they said. The curbs will also involve other regulators such as the National Development and Reform Commission, which oversees the power supply.
While the proposed restrictions are unlikely to have a noticeable effect on transaction speeds, they highlight global concerns over the growing energy consumption of bitcoin miners.
The industry now uses as much electricity as 3.4 million US households, according to the Digiconomist Bitcoin Energy Consumption Index. China is home to many of the world’s largest miners, some of whom have set up around hydroelectric facilities in Sichuan and Yunnan provinces.
“This may have contributed to bitcoin coming off its daily highs,” said Craig Erlam, senior market analyst at online trading firm Oanda in London. “Electricity usage certainly appears to be a significant challenge for the cryptocurrency in the years ahead.”
Bitcoin, which surged 15-fold last year, pared gains on Wednesday and traded around $14 900 on Thursday.
The PBOC didn’t immediately respond to a fax requesting comment sent after the close of regular business hours.
A report circulated on social media on Wednesday that China had asked bitcoin miners to shut is untrue, Caixin magazine reported, citing an “authoritative person”. The PBOC didn’t hold an internal meeting on Wednesday, Caixin added, without naming its source.
China’s scrutiny of miners follows a sweeping cryptocurrency crackdown last year. Authorities outlawed initial coin offerings in September and have called on local exchanges to halt virtual currency trading.
* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER