A Beijing judge struck down a bitcoin contract on the grounds that it was not in the public interest, citing incompatibility with China’s carbon neutrality goal
A Chinese court has struck down a cryptocurrency mining contract on the grounds that the emissions it generates are accelerating climate change.
Last week’s ruling shows Chinese judges are beginning to link national carbon targets to energy-intensive activities.
The case concerns to a dispute between a company that hired another to buy and operate cryptocurrency mining machines, but didn’t get all the bitcoin it thought it paid for. The first company filed a complaint. His request was rejected by a court which found the mining agreement itself invalid because it harmed the public interest.
On July 11, the Beijing Third Intermediate People’s Court confirmed the verdictbelieving that cryptocurrency mining threatens national economic security and social order. This is in accordance with a decision taken 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 cryptocurrency mining wastes energy resources in ways inconsistent with China’s path to carbon neutrality. “Judging by the high energy consumption of ‘mining’ and the impact of bitcoin trading activities on the country’s financial and social order, the contract in question should be invalid,” he said. .
Mining cryptocurrencies like bitcoin is extremely energy intensive. A study Posted in Nature Communication found last year that around 40% of bitcoin mines in China are coal-fired, while the rest use renewable energy. gGiven that Chinese mining powers almost four-fifths of global cryptocurrency trade, the study concluded that the industry risks undermining Chinese climate goals and broader global action.
Experts said that the latest court ruling mainly concerns the enforcement of the ban on cryptocurrency activities, because secret mining is on the rise again. But growing environmental and public concerns about energy security have a role to play.
With restrictions on activism and more broadly public debatelitigation has proven to be a powerful means for prosecutors and NGOs to enforce environmental measures.
Climate Change Lawsuits are just beginning to emerge, in part because China has no national climate legislation. But next President Xi Jinping’s commitment peak national emissions by 2030 and achieve climate neutrality by 2060, courts are beginning to consider non-legal policy documents or statements by executives in cases before them.
Danting Fan, climate and finance lawyer at ClientEarth China, said that in the absence of a national climate law, the latest judgment was the first time that a decision with final effect explicitly mentioned the objectives of climate change. peak and carbon neutrality of China and “determined a commercial contract”. null and void due to the high energy consumption of the bitcoin mining process, among other reasons, and required the parties to promote sustainable development”.
She noted that Zhou Qiang, Chief Justice of the Supreme People’s Court, encouraged judges to understand the climate implications of the cases before them. “This is the first example that we know of where the judge picked this up.”
How the decision will affect the Chinese cryptocurrency market is unclear. Alex de Vries, data scientist at De Nederlandsche Bank, researcher at Vrije Universiteit Amsterdam and the man behind Digiconomist, said that because miners have reduced their operations to stay under the radar, it is difficult for authorities to eliminate all.
Bitcoin’s price fell from an all-time high of over $65,000 in November 2021 to $18,000 in June, squeezing margins for miners. But de Vries said that, under the right conditions, mining can still be very profitable.
“The fall in prices has hit older, less efficient mining operations hard, but those running on very cheap electricity and the latest mining devices can still make a lot of money,” he said. “It really depends on the machines you have, how efficiently you can cool them, and the price you pay for electricity.”