A Chinese court has quashed a cryptocurrency mining contract on the basis that it generates a lot of emissions which further accelerate climate change.
A study which was published in Nature Communications last year showed that mining cryptocurrency like bitcoin is hugely energy intensive and that about 40% of China’s bitcoin mines are powered with coal, while the rest use renewables.
The study concluded that the industry risks undermining Chinese climate goals and wider global action, given that Chinese mines power nearly four-fifths of the global trade in cryptocurrencies.
According to reports, the judgment, among other things shows how much judges in China are starting to create a link between national carbon targets and energy-intensive activities.
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The case relates to a dispute between one company that contracted another to buy and operate cryptocurrency mining machines but did not get all the bitcoin it believed it had paid for.
After the first company sued, Its claim was rejected by a court which judged the mining agreement itself invalid because it harmed the public interest.
However, on 11 July, the Beijing Third Intermediate People’s Court upheld the verdict, ruling that mining cryptocurrency threatens national economic security and social order.
This, according to reports, is consistent with a decision by the People’s Bank of China last September to ban all cryptocurrency transactions, citing their role in facilitating financial crime and growing risks to the country’s economy.
The court added that mining cryptocurrency wastes energy resources in a way that is incompatible with China’s path to carbon neutrality. “Judging from the high energy consumption of ‘mining’ and the impact of bitcoin trading activities on the country’s financial and social order, the contract involved should be invalid,” it ruled.
Experts said that while the latest court ruling is primarily about enforcing the ban on cryptocurrency activities since covert mining is on the rise again, growing environmental and energy security concerns among the public do have a role to play.
Story was adapted from Climate Home News.
