A rogue bitcoin mining operation in Zhenjiang, a city located in the eastern Chinese province of Jiangsu, has been shut down by the police after stealing electricity worth nearly RMB 20 million (around $3 million), according to state-run media Xinhua (in Chinese).
Why it matters: According to the Zhenjiang police, the case is by far the largest cracked in the province by amount of electricity stolen.
- A large percentage of the world’s cryptocurrency mining activities take place in China in part due to cheap electricity sources. Crackdowns on large-scale mining farms could potentially cause volatility in Bitcoin prices.
Details: The Zhenjiang police confiscated around 4,000 mining machines found in nine factories and arrested 22 suspects who reportedly ran the operation using altered electricity cables.
- The Zhenjiang power supply company notified the police in March after observing a spike in electricity usage that began last year.
Context: The energy-intensive cryptocurrency mining process can be very expensive on a large scale. Many mining farms are based in China because of the surplus of cheap electricity. The Bitcoin price surge in recent months has attracted a slew of miners who had previously abandoned the activity to resume operations.
- Cryptocurrency activities including initial coin offerings (ICOs) and exchange services were banned in China in 2017. In April, the National Development and Reform Commission (NDRC) proposed to restrict or phase out cryptocurrency mining activities in the country.
- Despite the government’s ongoing efforts to curtail illegal cryptocurrency activities in the country, there are still many rogue mining facilities in China that are flying under the radar, especially small-scale operations.