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December 20, 2021 by Lipika Deka
Chinese miners are secretly continuing their underground operations despite the nationwide clampdown on Bitcoin [BTC] mining rigs by the country’s authorities back in May 2021. As per estimates, nearly 20% of miners stayed back during the mass exodus whereby they kept working under the government’s radar through a combination of grid electricity, hydro-power, and internet protocol address manipulation to protect their identities. So how do they do it?
A miner from the Chinese province of Sichuan spoke under the condition of anonymity revealed that he has been working day and night to avoid the authorities’ attention. He along with other crypto miners who have gone underground since the Beijing crackdown earlier this year is adopting unique tactics to evade detection.
Revealing on his stealth operation, the miner mentioned how he spreads his mining equipment across multiple sites so that no one operation catches the eye on the country’s electrical grid. In addition to that, he also divulged that he goes “behind the meter,” drawing electricity directly from small local power sources that are not connected to the larger grid, such as dams that are less likely to attract government attention. Further, he has taken steps to hide his geographic digital footprint, as well.
Data from a Chinese cybersecurity firm Qihoo 360 shows that crypto mining continues to thrive in the state even after the ban. As per a November report, there are an average of 109,000 active crypto mining IP addresses in China on a daily basis. Most of those addresses are located in the provinces of Guangdong, Jiangsu, Zhejiang, and Shandong.
The reason behind the Chinese crackdown
For one, China is experiencing severe power shortages, a resource vital for bitcoin mining. Secondly, Beijing has also made it clear that crypto mining stands in the way of its aggressive climate targets, as it pushes to achieve carbon neutrality by 2060. Apart from that, the state perceives cryptocurrencies as a threat to its digital yuan. Fred Thiel, CEO of Marathon Digital Holdings and a member of the Bitcoin Mining Council said,
“China’s government is doing everything they can to ensure that bitcoin and other cryptocurrencies disappear from the Chinese financial systems and economy. Part of this is to ensure the adoption of China’s central bank digital currency, and part of this is most probably to ensure financial surveillance activities are able to see all economic activity.”