Beijing has announced their intention to crack down on cryptocurrency mining in renewed efforts to eliminate an industry that is already suffering from dwindling investor interest. Is this the usual threat with no substance or is the cryptocurrency industry under real threat? Let’s take a closer look.
The new guideline
The government’s economic planning division added crypto mining to a long list of industries it seeks to eradicate citing “seriously wasted resources” or environmental pollution. The National Development Reform Commission, which is the government agency that compiled the list, is currently asking for the public’s feedback on the new protocol. They also implied that the ban can go into effect once it is issued. The time frame for consultations ends on May 7th.
China as a key player
The citizens of China used to be responsible for approximately 70% of Bitcoin mining. They were also responsible for about 90% of the world’s Bitcoin trades. However, the government has sought to diminish the cryptocurrency industry for about two years already. They claim that the cryptocurrency space produces speculative bubbles, fraud and wasteful energy consumption.
China has a relatively long history of waging war against the cryptocurrency sector. In 2017, the country outlawed initial coin offerings as well as demanding that local exchanges cease digital coin trading. Massive amounts of power are spent on Bitcoin mining. According to CNN, coal power was used extensively in Bitcoin mining through outfits in China. This could be at the very least, one of the reasons that the Chinese government requested local agencies make an effort to shut down miners. The NDRC’s latest protocol could hasten the process.
The mining exodus
The original reason that so many miners were located in China is due to the fact that electricity in China is so cheap. Responding to the latest guidelines, Bitmain Technologies, a privately owned company headquartered in Beijing, who builds application-specific integrated circuit (ASIC) chips for bitcoin mining, has begun relocating to North America. They are now shifting their mining activities to the US and Canada. BTC. Top, another Chinese cryptocurrency mining firm is establishing a new center in Canada.
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