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Hundreds of Banned Crypto Miners Were Siphoning Power at China’s State Firms - BLOOMBERG

OCTOBER 15, 2021

(Bloomberg) -- China’s drive to root out cryptocurrecnies has uncovered hundreds of miners who were using electricity at public institutions, a development that comes as the nation struggles with a power crunch.

Zhejiang and Jiangsu provinces recently started targeting miners who were consuming the resources of state-owned enterprises, government agencies, and universities and research institutes, according to a government statement and media reports that did not name the entities.

Jiangsu found about one-fifth of some 4,500 internet protocol addresses associated with illegal mining activity belonged to public institutions, according to the media outlet The Paper, which cited provincial communications authorities. Some 260,000 kilowatt hours of electricity were being used per day, the newspaper added.

Cryptominers typically link their equipment to cloud services called mining pools to verify transactions on blockchains, allowing their physical locations to be traced. That would lead investigators to accounts with electric companies.  

The Zhejiang government published a statement on an official social account that included photos of equipment seized in raids, adding that 184 IP addresses were suspected of involvement in illegal mining exploiting public resources.

“The rapid upgrading of mining hardware and fierce competition in computing power have resulted in massive energy usage, which is contrary to the carbon peak and carbon neutralization goals of the whole province as a major energy importer,” the statement said.

Calls to Zhejiang’s Cyberspace Administration and the Jiangsu Communications Administration went unanswered.

An electricity crunch caused by a shortage of coal has affected large swaths of China since last month, crimping growth forecasts in the world’s second-largest economy. While miners devour a lot of electricity, the amount consumed by the miners in Jiangsu worked out to 0.01% of its electricity demand based on 2020 data. The two eastern provinces combine to account for more than 16% of China’s total gross domestic product. 

China Premier Vows to Ensure Power Supply for Manufacturers

Beijing has been working to reassure the public it is doing everything it can to ensure supplies of electricity so companies stay open and homes are kept warm as the weather cools. On Thursday, Premier Li Keqiang visited a factory run by appliance-maker Midea Group Co. to say his government was working to ensure power demand was met.

Last month, Chinese authorities said all crypto transactions in the nation were banned and they would eliminate mining of digital assets. As part of the crackdown, the top economic planner asked local officials to investigate abnormal power usage, call in loans and eliminate preferential tax treatment to speed the shutdown of mining operations.

China’s campaign against crypto currencies is forcing miners to cease operations or move to friendlier regions like Europe and North America.

The U.S. has become the world’s epicenter for Bitcoin mining, accounting for 35.4% of the global hash rate at the end of August, according to a Cambridge Centre for Alternative Finance study published Wednesday. The rate -- a measure of computing power used to extract the digital currency -- was more than double the activity seen in April.


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