Bitcoin mining incompatible with China’s climate goals, court rules

A Beijing court ruled that a mining agreement between two Chinese companies was invalid, upholding the blanket crypto ban. The judge added that mining was at odds with China’s decarbonisation goals.

Bitcoin symbol broken down against a Chinese flag

A Chinese court in Beijing dismissed a complaint from a company which contracted another to purchase and run Bitcoin mining equipment, but said it failed to obtain the amount of Bitcoin that should have been mined. The judge deemed the contract invalid, arguing that it went “against public interest.”

The case dates back to 2019, before China imposed a blanket ban on all forms of cryptocurrency trading and mining, which went into effect in 2021. Despite the ban, Chinese miners have largely survived in the underground, the Cambridge Bitcoin Electricity Consumption Index (CBECI) data shows. According to the CBECI, China is now responsible for just over 21% of global mining activities, second only to the US.

Mining occurs “at the expense of power resources and carbon emissions,” the court assessed, and is at odds with “the goal of carbon peaking and carbon neutrality.” The ruling went on to add that “the two sides should not only abide by the rules of the market economy, but also shoulder the corresponding social responsibilities and promote high-quality and sustainable economic and social development.”

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While recent data on mining operations’ energy sources is hard to gather, and the ruling of the Beijing court was vague, a Nature Communications study published last year suggests that as much as 40% of the energy the Chinese mining farms consume comes from burning coal.

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Environmental concerns are beginning to play a more prominent role in China’s rejection of cryptocurrency trading and mining after President Xi Jinping committed to peak national emissions by 2030 and reach climate neutrality by 2060. There’s no indication that China’s climate policies will lead the country to partly lift the ban by embracing Proof of Stake blockchains.