Recently, I saw someone discussing Bitcoin mining issues again, so I decided to organize some of my observations. Speaking of Bitcoin, many people actually don’t understand what mining is or why a virtual thing needs to consume so much electricity.

In simple terms, Bitcoin mining is the process of using computers to perform extensive calculations to obtain Bitcoin. It may sound like nothing special, but the problem is that as more people participate, the difficulty of mining keeps increasing. This is related to Bitcoin’s underlying design mechanism. There are only 21 million Bitcoins in total, and every time 210,000 blocks are mined, the mining reward is halved. Initially, you could mine Bitcoin with a home computer in a day, but later it gradually became necessary to have more machines and more electricity to stay competitive.

According to research data from the University of Cambridge, the electricity consumption of Bitcoin mining once reached as high as 134.89 terawatt-hours. If viewed as a country, its electricity usage ranks among the top 30 in the world. This number is indeed astonishing. Why is that? Because mining farms need to stay ahead of others, the only way is to continuously upgrade equipment and purchase faster computing miners. A single mining machine consumes about 35 kW, and with cooling systems, fans, and other supporting equipment, a mining farm’s daily electricity consumption can meet the annual electricity needs of an average person.

So, is the Bitcoin mined worth anything? That’s an interesting question. Bitcoin was born in the context of the 2008 financial crisis, and Satoshi Nakamoto’s original intention was to create a form of electronic currency that is not controlled by governments. At first, no one paid much attention to it, and there’s the famous pizza story— a programmer exchanged 1,000 Bitcoins for two pizzas. But later, with recognition from the tech community, Bitcoin gradually gained market attention, and its price soared. By 2020, with the Federal Reserve’s massive liquidity injections, Bitcoin even broke through $68,000.

But I personally think, from the perspective of labor value theory, Bitcoin actually has little practical value. First, human society doesn’t need it; it’s not a necessity. Second, the “labor” of miners cannot be measured in traditional ways. Bitcoin has always been outside the commodity circulation system, and its current high price is essentially a bubble created by speculation. If we must say it has value, it might be due to its decentralized and anonymous features, but these same features are also the reasons why governments are wary of it.

At this point, I have to mention why China is cracking down on Bitcoin. First, resource issues. The electricity consumption of Bitcoin mining will only increase, exponentially. Nearly 70% of global Bitcoin mining farms used to be in China; miners would buy cheap hydropower in Yunnan, Guizhou, and Sichuan during the flood season, and buy cheap thermal power in Xinjiang and Inner Mongolia during the dry season. Some predict that by 2024, China’s annual Bitcoin mining electricity consumption will be equivalent to the total power generation of the Three Gorges Dam for multiple years. This is undoubtedly a huge burden on the country’s energy and economic development.

Second, financial security. The anonymity of Bitcoin makes it a natural cover for black industries such as money laundering, drug trafficking, and scams. Cracking down on Bitcoin circulation essentially aims to cut off the tools for illegal capital flows.

Most importantly, it’s about safeguarding monetary sovereignty. Virtual assets like Bitcoin pose huge financial risks. El Salvador adopted Bitcoin as legal tender in 2021, but after experiencing a bear market this year, it suffered losses of tens of millions of dollars. Some even say it might become the first country to go bankrupt due to “speculating on coins.” This case shows that, whether for countries or individuals, trading cryptocurrencies is not much different from gambling; it only erodes people’s morality and consumes a society’s productivity.

From all angles, China’s crackdown on Bitcoin mining and speculation is a very rational choice.