Stop cryptocurrency 'mining' for public good
Editor's Note: In a recent draft list of industries it intends to encourage, restrict or eliminate, the National Development and Reform Commission has said the cryptocurrency "mining" industry has to be eliminated. What will be the impact of this move on the cryptocurrency industry both at home and abroad? Two experts share their views on the issue with China Daily's Liu Jianna. Excerpts follow:
NDRC move will have limited impact on industry
The NDRC wants to eliminate the cryptocurrency "mining" industry mainly for two reasons. First, cryptocurrency mining causes a huge waste of resources as its nature is to make the "miners" do extremely difficult math to compete for new blocks that are found every 10 minutes, on average. To contend for the reward and the right to record the blocks, the miners have to use a lot of computing power and huge amounts of mostly coal-generated electricity.
According to the Bitcoin Energy Consumption Index, bitcoin's current estimated annual electricity consumption is 55.26 terawatt hours, more than the total consumption of countries such as Romania, Uzbekistan and Bangladesh.
Besides, cryptocurrency is illegal in China. In fact, the authorities listed bitcoin as illegal currency in 2013 as it doesn't have the properties of a currency, such as legal tender and unconditional government promise of exchange, and closed the cryptocurrency exchange platforms in 2017. The achievements that the miners claim to have made cannot be put to actual use in China, leading to a huge waste of resources.
Yet the NDRC's recent move is not expected to have a big impact on the industry's development because China made its policy toward cryptocurrency public clear a long time ago.
But as an emerging industry in the information era, cryptocurrency has some potential properties. People's Bank of China established a team of cryptocurrency research staff several years ago. In February, JPMorgan Chase issued its first cryptocurrency "JPM Coin", which requires the users to deposit a commensurate number of dollars in the bank first. China may take a similar approach if it ever issues cryptocurrency.
A bubble, similar to the internet bubble in 2000, has been formed in the blockchain industry. Once the bubble bursts, certain reliable and valuable companies will gradually develop and expand. As an advanced technology, blockchain has promising prospects and can be put to good use in different sectors. For instance, knowledge blockchain could guarantee the reliable transmission of credible knowledge.
But the supervision on the blockchain industry should be strengthened to prevent new types of fraud, for example, cryptocurrency fraud, which has led to the bankruptcy of a number of people.
Blockchain technology a double-edged sword
Cryptocurrency mining is a kind of high-speed computing activity, which consumes a lot of electricity. It is estimated that electricity charges account for nearly a third of the bitcoin mining cost. The electricity used for cryptocurrency mining last year was equal to that used by all electric vehicles across the world.
The energy-intensive cryptocurrency mining industry, which serves the speculative transactions of cryptocurrency, actually doesn't generate any practical value. Therefore, it should be eliminated for the good of the people, the environment, and the blockchain industry.
Technology is a double-edged sword. On the one hand, since it promotes supply-chain finance, cross-border payment and asset securitization, the blockchain technology behind bitcoin is undoubtedly a significant progress in technology.
On the other hand, the boom of cryptocurrency such as bitcoin has created the cryptocurrency mining industry, which is prone to accumulating financial risks and is highly wasteful. Oversight in this field is expected to strengthen with increased understanding of this emerging industry.
The views don't necessarily represent those of China Daily.