Most people are well aware of how the majority of Bitcoin mining takes place in China. Not only is this a centralization problem, it also means China is still dictating the Bitcoin landscape to a certain extent. Last week, news broke that the Chinese government was cracking down on Bitcoin mining. It seems a portion of that information was vastly overstated, even though mining business operators were asked to exit the industry in an orderly fashion.
THE FUTURE OF BITCOIN MINING IN CHINA
It was only a matter of time before the Chinese government turned its attention to other parts of the cryptocurrency industry which could prove problematic in the long run. After the PBoC shut down CNY-based trading a while ago, it was time for it to look at the Bitcoin mining industry. Given the vast electricity use associated with this type of operation and the speculative side of cryptocurrency, a new decree has been issued. It is not something most Chinese Bitcoin miners will like, though.
It seems the Chinese government is greatly concerned over the consumption of electricity associated with the mining of cryptocurrencies. Since the government wants to focus primarily on curbing deviations from the real economy, Bitcoin and consorts have proven to be rather problematic. Moreover, these issues have been discussed among the country’s municipalities and provincial governments. As a result, a new “arrangement” has been put in place to make cryptocurrency mining far less attractive.
The goal is to guide firms in exiting the cryptocurrency mining business as soon as possible. The decree will affect the amount of electricity businesses can use moving forward, which will effectively put an end to cryptocurrency mining over time. It is expected this “exodus” will commence on January 10, although it remains unclear how long companies will have to exit the industry.
It is evident this sector is a problem for the Chinese government, although most cryptocurrency enthusiasts were well aware that such measures would be introduced sooner or later. Companies which continue to mine – but in a scaled-down manner – will have to adhere to some new conditions. Details will need to be provided to the government including the business name, registered capital, the number of mining machines, operating income, and so forth. None of these guidelines are overly invasive, although a reduction in the amount of electricity to be consumed will force companies to either scale down or look for new places to set up shop.
Speaking of which, it seems a few companies are already planning to leave China altogether. It seems Canada is an attractive destination right now, although locations with access to renewable energy sources will become even more attractive over time. It is a good thing to see mining firms leaving China – either partially or fully – as it has become evident this Asian country wants nothing to do with cryptocurrencies whatsoever.