Authorities in China are reportedly planning to throttle power supplies to bitcoin miners, a move that could have serious ramifications for the mining industry there.
The People’s Bank of China set out its plans yesterday in a private meeting, and those responsible for the leaks offered the information on the condition of anonymity, according to Bloomberg.
Nevertheless, the news has already sent shockwaves through Chinese cryptocurrency miners, who rely on the energy-intensive mining process to uncover new crypto tokens.
The decision is thought to be a response to concerns that miners were leveraging cheap energy prices in some parts of China to the detriment of other users, resulting in power outages and disruptions of normal energy supply.
While there are few details about the exact methods being proposed for restricting their energy usage, it is thought that the approach will bring multiple different government agencies into the fold. Most notably, this will include the National Development and Reform Commission, which will be specifically tasked with enforcing the new measures.
The concerns from Chinese officials come at a time of increasing criticism on the amount of energy used in cryptocurrency mining, which now accounts for as much consumption across the industry as 3.4 million homes.
China, in particular, is host to some of the biggest mining firms in the world, including several which have set up in close proximity to major energy appliances, such as the hydroelectric facilities in Yunnan and Sichuan provinces.
Craig Erlam, from trading firm Oanda, said that energy consumption would continue to be one of the main issues affecting the sector in the months and years to come.
“This may have contributed to bitcoin coming off its daily highs…Electricity usage certainly appears to be a significant challenge for the cryptocurrency in the years ahead,” he said.
Representatives from the People’s Bank of China were unavailable for comment, though earlier reports thought to be from officials at the bank denied the meeting ever took place.
It remains to be seen whether the measures will be enacted in due course, and their potential impact on the fledgling cryptocurrency mining industry.