Breakingviews – Capital Calls: China digs bitcoin holes

Mining facilities for cryptocurrency will be seen in Pristina, Kosovo on June 12, 2018.

HONG KONG (Reuters Breakingviews) – Brief insight into the global economy of the Covid-19 era.

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SUPPLY-SIDE CRYPTO-NOMICS. China is chewing up another supply chain. Just weeks after bitcoin nearly reached $ 60,000, Inner Mongolia has released a proposal to close cryptocurrency mining and ban new digital currency projects in April. The region’s computers account for 8% of global bitcoin production, while China accounts for over 70% overall.

When provinces respond to President Xi Jinping’s goal of being carbon neutral by 2060, massive mining in Xinjiang and Sichuan could be shut down next. The energy required is astounding; The University of Cambridge estimates that bitcoin alone – and there are thousands of cryptocurrencies worth $ 1.5 trillion, according to CoinMarketCap – will consume over 128 terawatt hours of electricity per year based on current prices, slightly less than Sweden.

Pressure would hurt industry suppliers such as Canaan and Nvidia, and relocating mining en masse would be disruptive. At present, scarcity value can give the volatile virtual raw material an unnecessary upward pressure. (By Pete Sweeney)

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