HONG KONG (Reuters Breakingviews) - Concise insights on global finance in the Covid-19 era.
SUPPLY-SIDE CRYPTO-NOMICS. China is gumming up another supply chain. Just weeks after bitcoin nearly hit $60,000, Inner Mongolia has published a proposal to shut down cryptocurrency mining operations and ban new digital coin projects by April. The region’s computers account for 8% of global bitcoin production while China overall is responsible for over 70%.
As provinces respond to President Xi Jinping’s aim of being carbon-neutral by 2060, massive mining operations in Xinjiang and Sichuan might be switched off next. The energy required is staggering; 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 rates, slightly less than Sweden.
A squeeze would hurt industry suppliers such as Canaan and Nvidia, and moving mining operations en masse will be disruptive. For now, scarcity value could give the volatile virtual commodity an unneeded upward push. (By Pete Sweeney)
Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.
Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.