Why is Bitcoin mining banned in China?

The Bitcoin mining ban in China is causing a lot of concern to miners, investors, speculators, and others and you will see why here.

Bitcoin mining and the electricity challenge

Mining Bitcoin involves verifying transactions, and it is very different from gold mining, where miners discover new gold. In an article, The Economist says that Bitcoin miners are more of ‘record keepers’ than ‘miners’, in the traditional sense of both words. They are in charge of keeping the blockchain consistent and unalterable. As the official site of a trading platform explains, the blockchain is the main way to exchange crypto via a network of computers.

However, while it looks simple on paper, it is actually more time and energy-consuming in practice. Our major concern is the energy usage required by computer systems running mining software. Why?

Despite the improvements in computer processing power, carbon footprint and its environmental impact are still issues. And the processing power needed to run Bitcoin mining algorithms are high. Business Insider claims that Bitcoin mining consumes more nearly 91 terawatt-hours of electricity every year. The same article says that this activity uses more annual electricity than all of Finland (5.5 million people) and Google.

Understandably, it is a cause of concern for many environmentalists. However, Bitcoin bigwigs are not sitting by idly. Investopedia says that there are ongoing efforts to reduce carbon footprints by seeking cleaner and greener energy sources. Also, they are attempting to use proof-of-stake (PoS) as a consensus mechanism instead of the proof-of-work (PoW) model, which is energy-consuming.

Yet, their efforts do not seem to be paying off because there appears to be a growing clampdown on bitcoin mining.

Why is Bitcoin mining banned in China?

The arguments about this are two-pronged: control and environment. On the first aspect, China is a communist republic and has been cast as ‘controlling’ by the media. Thus, a decentralized transaction system will cause problems for the government as Bitcoin seeks to make people independent of traditional economic systems. Understandably, people feel that the slow but steady fight against crypto in the country is in the government’s best interest.

The second aspect of this argument is that the country wants to reduce its carbon footprint, and Bitcoin mining will not allow this plan to work. Consider that a higher percent of China’s electricity comes from coal, and in September 2019, more than three-quarters of Bitcoin mining was being done in its region. Couple this with the amount of electricity the activity consumes, and it is easy to see the environmental challenge China faced.

Regardless of what school of thought you follow, the fact is that Bitcoin mining is illegal in China. It has also directed all banks to stop facilitating cryptocurrency transactions, and it is not alone in that regard. In 2021, cryptocurrency is illegal in:

  1. Algeria
  2. Bolivia
  3. Colombia
  4. Egypt
  5. Indonesia
  6. Iran
  7. India

Is Iceland banning Bitcoin mining?

Not outrightly. In December 2021, Iceland’s energy supplier, Landsvirkjun, rejected requests from new customers in the mining sector to join its power grid. The Canadian Hive Blockchain Technologies, Hong Kong-listed Genesis Mining, and Bitfury Holding are mining companies still connected to the grid, but new ones have to sort themselves out.

Bitcoin mining ban in China - concerns, solutions, more
Iceland power plant.

The issue in Iceland is due to lack of energy, as Landsvirkjun mentioned malfunction at a power station and the low water reservoir levels. Also, take note that it is also limiting energy supplies to industrial customers like aluminum producers and fish processing plants as well as consumers with curtailable short-term contracts.

Before now, Iceland offered one of the cheapest energy anywhere in the world, but it seems that the influx in crypto miners has contributed to higher demand, and the country is struggling to keep up. The issues for Bitcoin mining do not end here. In November 2021, Swedish regulators requested an EU-wide ban on crypto mining. Soon, we will have a list of countries that support this proposal.

Solutions to Bitcoin mining energy consumption issue

Some of the best minds have taken the energy consumption issue of Bitcoin mining heads on. So far, the suggested solutions include:

  1. Switching to less energy-consuming consensus mechanisms like proof-of-stake (PoS).
  2. Seeking cleaner and green energy sources for mining like solar, geothermal, water, wind, and so on.
  3. Reducing mining carbon footprint by engaging in environment-friendly activities like reforestation, repurposing heat from mining, and so on.
  4. Government and policymakers should put environmental regulations in place, both for restrictions and corporate social responsibility (CSR).


It seems like China’s Bitcoin mining ban is the least of problems for miners as more countries are also taking the fight up. Since there is a risk of copying, counterfeiting, or double-spending the same coin more than once, putting an end to mining will mean the end for Bitcoin as a whole. The way out is to find a workable solution quickly as the crypto is now in a dicey situation.

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About The Author


Obinna is a fiction writer from Lagos, Nigeria, and grew up loving comic book characters and superheroes. He watches lots of action films and writes entertainment and technology articles. He is also interested in science and how things work.

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