According to the Jiangsu Provincial Communications Administration website, the bureau has recently comprehensively investigated virtual currency "mining" activities in Jiangsu Province. Monitoring found that the export traffic of mining pools carrying out virtual currency activities in Jiangsu Province reached 136.77Mbps, and the total number of Internet IP addresses participating in "mining" was 4,502, consuming more than 10 PH/s of computing resources and 260,000 kWh/day of energy.
Take Ethereum and Bitcoin, which have a lot of virtual currency "mining" activities in the province, as examples. The cities with more "mining" include Suzhou, Xuzhou, and Nanjing. Judging from the ownership and nature of IP addresses, about 21% of those belonging to party and government agencies, universities, and enterprises were invaded and used to carry out virtual currency “mining” activities.
In the next step, the Jiangsu Provincial Communications Administration Bureau will continue to carry out analysis of the virtual currency "mining" situation, and further unite relevant departments to form a "multi-dimensional, multi-level" disposal system, dispose of relevant websites and mobile applications in accordance with the law, and cooperate with the tracing and crackdown on illegal virtual currency transactions.
How much electricity does virtual currency “mining” cost?
Virtual currencies are encrypted digital currencies, which consist of a series of passwords. "Mining" means decryption. At every other point in time, the virtual currency system will generate a random code on the system node. Calculating this random code requires a lot of GPU operations. Decrypting this code and confirming the virtual currency transaction require complex operations. Because its working principle is very similar to mining minerals, it is named "mining", and prospectors are also called miners. Miners use computers to perform these operations and then receive virtual currency rewards. This is the so-called virtual currency mining mechanism.
Take Bitcoin as an example. Bitcoin has a limited total amount. The total amount will be 10,500,000 BTC in the first 4 years. The amount of output will be halved every 4 years. In the 4th to 8th year, 5,250,000 BTC will be generated, in the 8th to 12th year, only 2,625,000 BTC will be generated, and so on. By the end, the total number of Bitcoins generated was close to 21,000,000 BTC.
One Bitcoin is divided into 8 decimal places based on the data structure, which is 0.00000001 BTC. The smallest unit of Bitcoin mined by miners is 0.00000001 BTC. Bitcoin is like a golden mountain consisting of a total of 21 million gold coins. To get it, players need to use the computing power of computers and calculate a set of numbers that conform to specific rules based on existing algorithms.
If the computer is turned on 24 hours a day to mine Bitcoin, only 0.0018 Bitcoins can be mined, which means that it takes about 556 days to mine one Bitcoin. It is reported that the current computing power of Bitcoin's entire network has reached 3 million hash collisions per second, while an ordinary computer, even with a top-end computer, has only 1000H/s computing power. Based on the calculation that 0.0018 Bitcoins can be mined in 24 hours, it will take a user at least 556 days to mine one Bitcoin.
Assuming that the power of the mining machine is 1,350 watts, approximately one kilowatt hour of electricity is used per hour, and the daily electricity bill is about 16.8 yuan. It takes 556 days to mine one Bitcoin, which means that it will cost at least 9,367 yuan in electricity to mine one Bitcoin. And this is just an ideal situation. "Mining" requires a massive computing system that solves millions of complex calculations every second to verify transactions on the network. This requires a lot of electricity to maintain, cool and run the machinery.
According to statistics from Xinhua News Agency, some "mines" consume millions of kilowatt-hours of electricity a day; a "mine" in a western province can "eat" 45 million kilowatt-hours of electricity in a month. The annual electricity consumption of a "mine" somewhere in the southwest is equivalent to the total annual electricity consumption of three cities.
Research by the Alternative Finance Research Center of the University of Cambridge shows that as of 2020, the annual power consumption of global Bitcoin "mining" is approximately 149.37 terawatt hours (1 terawatt hour is 1 billion kilowatt hours of electricity). This number has exceeded the power consumption of Malaysia, Ukraine, and Sweden, and is close to Vietnam, which ranks 25th in power consumption. Data from the Cambridge Bitcoin Electricity Consumption Index shows that as of the end of 2020, approximately 65% of global Bitcoin mining activities occurred in China.
It was included in the catalog of eliminated industries two years ago.
As early as 2019, the National Development and Reform Commission attempted to include virtual currency mining in the catalog of eliminated industries. On April 8, 2019, in the "Guidance Catalog for Industrial Structural Adjustment (2019 Edition, Draft for Comments)", virtual currency "mining" activities were included in the eliminated industries and fell into the category of "backward production technology and equipment", and mining activities were also included in the industries that should be "immediately eliminated". According to this catalog, the elimination category mainly includes backward processes, technologies, equipment and products that do not comply with relevant laws and regulations, do not meet safe production conditions, seriously waste resources, pollute the environment, and need to be eliminated. However, on November 6, 2019, the Chinese government website released the "Guidance Catalog for Industrial Structural Adjustment (2019 Edition)". According to the document, "virtual currency mining", which was once among the eliminated industry categories, was deleted from the released guidance catalog.
Although the National Development and Reform Commission deleted “virtual currency mining” from the elimination catalog in 2019, it does not mean that the country affirms or encourages mining. As the popularity of Bitcoin rises after 2020, currency prices have become volatile, domestic financial fund-raising fraud crimes involving virtual currencies have emerged one after another, and energy consumption has further increased due to the increase in mining difficulty, which has seriously affected the power supply balance in some areas.
In recent days, the state has taken vigorous measures to rectify the problem. On September 24, 11 departments including the National Development and Reform Commission and the Ministry of Public Security issued the “Notice on Rectifying Virtual Currency “Mining” Activities. The notice points out that the supervision of the entire upstream and downstream industry chain of virtual currency "mining" activities will be strengthened, new virtual currency "mining" projects will be strictly prohibited, and the orderly exit of existing projects will be accelerated to promote the optimization of industrial structure and help achieve carbon peak and carbon neutrality goals as scheduled. The notice emphasized that "virtual currency 'mining' activities" will be added to the "elimination category" of the "Industrial Structural Adjustment Guidance Catalog (2019 Edition)". Before the supplement is included, the virtual currency "mining" project will be treated as an obsolete industry, and investment will be prohibited in accordance with the relevant provisions of the "Decision of the State Council on the Issuance and Implementation" (Guofa (2005) No. 40).
On October 8, the National Development and Reform Commission also publicly solicited opinions from the public on the "Market Access Negative List (2021 Edition)" and re-included virtual currency "mining" in the elimination list. The "Market Access Negative List (2021 Edition)" lists 6 prohibited access items and 111 permitted access items, for a total of 117 items. Among them, in the revision of relevant measures in the "Industrial Structural Adjustment Guidance Catalog" on the last page, item 7 of the elimination category "1. Outdated production technology and equipment" (18) and other items were added. After the revision, the description of the measure was added: virtual currency "mining" activities.
In September 2020, President Xi Jinping announced two major Chinese environmental policies at the United Nations General Assembly. First, China, the world's second largest economy, plans to reach its carbon dioxide emissions peak in 2030. Second, China will achieve the goal of carbon neutrality (that is, net carbon emissions are zero) by 2060. Virtual currency “mining” activities not only consume electricity resources, but also increase carbon emissions. They have low contribution to the national economy and have limited role in promoting industrial development and scientific and technological progress. In addition, the risks derived from the production and transaction of virtual currency are becoming more and more prominent. If it is allowed to develop blindly and disorderly, it will have a negative impact on promoting high-quality economic and social development and energy conservation and emission reduction.
