China Moves to Ban Bitcoin Mining

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The Communist Party of China is undertaking a crackdown on bitcoin mining according to leaked documents ordering local governments to “lead mining factories to quit gradually.”

China’s Leading Group of Internet Financial Risks Remediation wants bitcoin miners to make an “orderly exit,” asking local authorities to come up with plans by the 10th of January and then report on progress on the 10th of each month.

Leaked documents demanding “orderly exit”

The authenticity of another leaked document from the internet-finance regulator’s Xinjiang office that likewise demands progress on miner’s exit by the 5th day of each month was confirmed by Quartz.

The China based 8btc quotes “a man close to the central bank” as stating:

“The Bitcoin trading platform has been shut down in China. It is an unrecognized area, the same with the mining-related peripheral industry. The spirit is to guard against risks and serve the real economy. While bitcoin mining does not serve the real economy.

There are many irregularities such as environmental problems, potential safety issues and operation without business registration in the current bitcoin mining industry. Therefore, departments are making joint effort to rectify this.”

Bloomberg reports miners are already moving out operations to US, Canada, Iceland or other parts of the world outside of China:

“Bitmain, which runs China’s two largest bitcoin-mining collectives, is setting up regional headquarters in Singapore and now has mining operations in the U.S. and Canada, Wu Jihan, the company’s co-founder, said in an interview. BTC.Top, the third-biggest mining pool, is opening a facility in Canada and ViaBTC, ranked No. 4, has operations in Iceland and America, their founders said.”

It is unclear whether this is a full on ban of bitcoin mining or simply a closure of the biggest mining farms, but after banning crypto exchanges and ICOs, China now seems to be moving towards fully curtailing bitcoin operations.

Some miners are already taking steps to close down with ViaBTC just announcing they are closing their cloud mining contracts:

Some 80% of miners are based in the country who were concerned as far back as September that the authorities might target them next after closing the crypto exchanges.

That now appears to be the case, with measures taken to “guide” them out by using “electricity price, land use, tax, and environmental protection, among other things.”

It is probable that all other cryptos will be affected as China based miners process ethereum, Bitcoin Cash, Zcash and pretty much everything else, gaining a competitive advantage due to cheap labour and electricity prices.

That, however, seems to now be coming to an end, with a crackdown potentially leading to more diversification and perhaps even a higher level of decentralization, but it remains to be seen just how orderly the exit will be as China closes the door fully shut.

 

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