Notice on Rectifying Virtual Currency Mining Activities

Notice of the National Development and Reform Commission and Other Departments on Rectifying Virtual Currency Mining

Activities

To the people's governments of all provinces, autonomous regions and municipalities directly under the Central Government, and the Xinjiang Production and Construction Corps:

To effectively prevent and address the risks and potential hazards arising from the unchecked and disorderly development of virtual currency mining, further advance energy conservation and emissions reduction, and help achieve the targets of peaking carbon emissions and reaching carbon neutrality on schedule, the following matters concerning the rectification of virtual currency mining activities are hereby notified:

I. Fully recognize the importance of rectifying virtual currency mining activities

Virtual currency mining refers to the process of generating virtual currencies through computation using dedicated mining machines. It consumes large amounts of energy and produces substantial carbon emissions, makes a limited contribution to the national economy, and has limited effects in driving industrial development and technological progress. In addition, risks arising from the production and trading of virtual currencies are increasingly pronounced. The unchecked and disorderly development of mining adversely affects high-quality economic and social development, energy conservation and emissions reduction. Rectifying virtual currency mining is important for optimizing China's industrial structure, advancing energy conservation and emissions reduction, and achieving the targets of peaking carbon emissions and reaching carbon neutrality on schedule. All regions, departments and relevant enterprises shall attach great importance to this work, fully recognize its necessity and importance, and treat it as an important task in promoting high-quality economic and social development. They shall further strengthen their sense of responsibility and urgency, focus on key aspects, adopt effective measures and comprehensively rectify virtual currency mining activities to ensure practical results.

II. Overall requirements

(1) Guiding principles. Guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, fully implement the guiding principles of the 19th National Congress of the Communist Party of China and the second, third, fourth and fifth plenary sessions of the 19th CPC Central Committee, thoroughly apply Xi Jinping Thought on Ecological Civilization, and resolutely implement the new development philosophy. Following the overall approach of 'close monitoring, rigorous risk prevention, a strict ban on new projects, and proper handling of existing projects', fully combine the efforts of all regions and departments, strengthen oversight of the entire upstream and downstream industrial chain of virtual currency mining, strictly prohibit new mining projects, accelerate the orderly exit of existing projects, promote optimization of the industrial structure, and help achieve carbon-peaking and carbon-neutrality targets on schedule.

(2) Basic principles.

Maintain responsibility at each level. Establish a working mechanism with central coordination, overall provincial responsibility and implementation by cities and counties. The central authorities shall coordinate the overall nationwide rectification of virtual currency mining. Provincial governments bear overall responsibility for rectification within their regions, ensure that city and county governments fulfil their implementation responsibilities, and set specific implementation plans in accordance with unified central arrangements. City and county governments shall refine implementation measures in accordance with central arrangements and provincial implementation plans and ensure that the measures are fully implemented.

Apply differentiated treatment. Distinguish new virtual currency mining projects from existing projects. Investment in and construction of new projects are strictly prohibited, and mining projects must not be developed under any name. Accelerate the orderly exit of existing projects and, while ensuring a smooth transition, determine appropriate exit timetables and implementation paths in light of local circumstances.

Act in accordance with laws and regulations. Comprehensively advance the rectification of virtual currency mining using law-based thinking and methods, strictly implement relevant laws, regulations, rules and systems, and rigorously investigate and rectify non-compliant mining activities in all regions.

Proceed proactively and prudently. In advancing the rectification of virtual currency mining, take proactive action while proceeding prudently, both accelerating project exits and properly resolving conflicts and disputes to ensure social stability.

III. Comprehensively identify and investigate virtual currency mining projects

(3) Identify and investigate existing projects. Comprehensively identify local virtual currency mining projects already in operation and establish a project inventory. For every operating project, compile basic data including the enterprise concerned, scale, computing power and electricity consumption, and update the inventory dynamically each week. Comprehensively investigate whether mining takes place in big-data industrial parks and high-tech parks, accurately distinguish data centres from virtual currency mining farms, and ensure that no gaps remain in local mining investigations.

(4) Identify and investigate new projects under construction. Intensify investigations at every stage of preliminary work for virtual currency mining projects. Establish an inventory of projects under construction or being prepared for construction, and compile basic information for each project, including the enterprise concerned, scale, computing power, electricity consumption and planned commissioning date. Strengthen screening during energy-conservation reviews and applications for electricity connection to ensure that investigation data are accurate and comprehensive.

(5) Strengthen monitoring and analysis of abnormal electricity consumption. Further analyze data on grid-connected power generation and abnormal electricity consumption, use technological means for monitoring and supervision, and strengthen on-site inspections of major electricity-consuming data centres. Intensify monitoring of load-reduction data from grid-connected power plants, excluding reductions caused by system-related factors such as water inflows or dispatch, to prevent public grid-connected power plants from supplying virtual currency mining enterprises directly through dedicated lines. Promptly report any illegal electricity supply discovered to the relevant regulatory authorities.

IV. Strictly prohibit investment in and construction of new projects

(6) Strengthen constraints on new virtual currency mining projects under the dual-control system for total energy consumption and energy intensity. Incorporate the strict prohibition on new mining projects into the dual-control assessment system and strictly enforce local governments' responsibilities for energy consumption control. For regions where new mining projects are discovered and verified, the energy consumption of those new projects shall be counted at twice its actual amount in dual-control assessments.

(7) Classify virtual currency mining as an industry to be eliminated. Add 'virtual currency mining activities' to the 'eliminated category' of the Guiding Catalogue for Industrial Restructuring (2019 Edition). Before that addition is made, mining projects shall be treated as an industry in the eliminated category, and investment shall be prohibited under the relevant provisions of the State Council Decision on Issuing and Implementing the Interim Provisions on Promoting Industrial Restructuring (Guo Fa [2005] No. 40).

(8) Strictly prohibit virtual currency mining under the name of data centres. Strengthen regulatory investigations of mining activities, clearly distinguish mining from industries such as blockchain, big data and cloud computing, and guide relevant enterprises towards high-tech industries with low resource consumption and high added value. Strictly prohibit the use of data centres for mining and prohibit the promotion or expansion of mining projects in the name of developing the digital economy, strategic emerging industries or similar initiatives.

(9) Strengthen credit-based supervision of data-centre enterprises. Conduct credit-based supervision of data-centre enterprises, implement a credit commitment system, and arrange for enterprises to sign commitment letters voluntarily undertaking not to participate in virtual currency mining. Using credit information-sharing platforms at all levels, include both the commitments and their fulfilment in enterprise credit records as a basis for ongoing and ex post supervision. Impose restrictions in accordance with the law on enterprises that fail to fulfil their commitments.

(10) Strictly restrict applications for electricity connection and energy use by virtual currency mining enterprises. Prohibit electricity connection applications for new mining projects, strictly review electricity connection business, and do not supply electricity to mining enterprises under any name. All pending connection applications shall cease to be processed. Strictly implement the electricity business licensing system and prohibit supplying enterprises with new mining projects through supply before electricity enters the grid, dedicated lines or similar arrangements. Strengthen supervision of electricity connection business and conduct random verification checks through methods such as random selection of inspection targets and inspectors with public disclosure of results.

(11) Strictly prohibit fiscal, tax and financial support for new virtual currency mining projects. Local governments, financial institutions, non-bank payment institutions and others are strictly prohibited from supporting new mining projects through fiscal, tax, financial or any other means. Government-led industrial parks must not introduce new mining projects.

V. Accelerate the orderly exit of existing projects

(12) Investigate and penalize unlawful and non-compliant electricity supply in accordance with the law. Intensify administrative law enforcement and resolutely eliminate practices whereby power-generation enterprises, especially small hydropower enterprises, supply mining projects before electricity enters the grid or directly through dedicated lines. Mining enterprises are strictly prohibited from developing captive power plants to supply themselves in any form. Keep channels such as the 12398 energy regulation complaints and reporting hotline accessible, rigorously investigate unlawful and non-compliant electricity supply, and impose administrative penalties in accordance with laws and regulations. Take measures in accordance with the law to suspend or restrict electricity supply to mining enterprises whose illegal electricity use has been verified.

(13) Apply differentiated electricity prices. Include mining projects within the scope of the differentiated electricity pricing policy and apply the electricity prices for enterprises in the eliminated category, with a surcharge of RMB 0.30 per kilowatt-hour. Local authorities may further increase the surcharge in light of actual circumstances. Update mining project inventories promptly and strengthen supervision and inspection to ensure strict implementation of differentiated electricity pricing and the timely collection of the surcharge in full from mining enterprises.

(14) Do not permit virtual currency mining projects to participate in the electricity market. Strengthen oversight of electricity market order and screening of enterprise users participating in the market. Mining projects must not participate in the electricity market under any name or enjoy electricity market price concessions in any form. Mining projects that have already entered the electricity market must exit within a specified time limit.

(15) Discontinue all fiscal and tax support for virtual currency mining projects. Preferential policies already granted by local governments to existing projects, such as preferences relating to taxes and fees, rent, and water and electricity charges, shall be terminated and withdrawn within a specified time limit. Local governments must not grant fiscal subsidies or preferential tax policies to mining projects or the parks in which they are located.

(16) Cease providing financial services for virtual currency mining projects. Financial institutions and non-bank payment institutions are prohibited from directly or indirectly providing financial services or any form of credit support to mining enterprises and projects, and shall take measures to recover loans already issued. Rigorously combat all forms of illegal fundraising and unlawful securities issuance carried out in the name of virtual currency mining.

(17) Eliminate projects within specified time limits under the Guiding Catalogue for Industrial Restructuring. In accordance with the relevant provisions of the Catalogue, take effective measures to immediately begin the orderly rectification and elimination of existing mining projects. Enterprises that fail to eliminate their projects on schedule shall be ordered to suspend production or be closed under relevant national laws and regulations. Relevant liability shall be pursued in accordance with the law against those violating the provisions.

VI. Safeguard measures

(18) Clarify the division of responsibilities. Development and reform departments, together with departments responsible for finance, energy, industry and information technology, cyberspace affairs, public finance, taxation and market regulation, shall coordinate the rectification of mining activities. All regions shall establish corresponding coordination mechanisms, refine measures and ensure implementation of the tasks. All regions and relevant departments shall strengthen coordination and information sharing and effectively advance rectification under the principle of central coordination, overall provincial responsibility and implementation by cities and counties.

(19) Combine regulatory efforts. Financial regulatory authorities and cyberspace authorities shall strengthen monitoring, analysis and look-through supervision of relevant entities. Mining farms identified by crypto-asset big-data monitoring platforms and other means shall be traced to IP addresses, specific enterprises and physical premises. Information sharing, exchanges and data cross-checking with relevant regulatory authorities shall be strengthened to support coordinated governance across the entire chain. Energy regulators shall intensify investigations into non-compliant electricity supply projects and projects with electricity safety hazards, and supervise participation in electricity market trading that violates the rules. Relevant local departments shall establish joint working mechanisms to address the full chain of virtual currency mining and trading. All regions shall establish and improve reporting platforms and maintain accessible channels through which the public can supervise mining projects.

(20) Strengthen supervision of implementation. All regions shall establish timetables and road maps, maintain working records, strengthen implementation, and promptly track and analyze the progress and effectiveness of relevant policy measures within their regions to ensure that all measures are implemented thoroughly and effectively. Relevant national departments shall arrange, at appropriate times, for third-party institutions to assess the closure and exit of mining projects in various regions, and establish an information reporting mechanism to promptly communicate progress in each region.

National Development and Reform Commission

Publicity Department of the CPC Central Committee

Cyberspace Administration of China

Ministry of Industry and Information Technology

Ministry of Public Security

Ministry of Finance

People's Bank of China

State Taxation Administration

State Administration for Market Regulation

China Banking and Insurance Regulatory Commission

National Energy Administration

3 September 2021