China To Make Decision On Banning Bitcoin Mining Industry

Mae Love
April 12, 2019

The decision doesn't appear to be final - the National Development and Reform Commission (NDRC) is seeking public opinions on a revised list of industries that will either be encouraged, restricted or eliminated. The Chinese public on the other hand has until May 7 to comment on the draft before it's finalized.

According to the state-owned news outlet Securities Occasions, the draft list " clearly reflects the attitude of the country' s industrial policy" towards cryptocurrencies. And one of the industries on the list for elimination is cryptocurrency mining, including bitcoin.

Other bitcoin traders said they were not surprised by the government's move.

According to Cryptoslate, 74% of bitcoin's network hashrate - that is, the process of mining - originates from Chinese-managed pools.

Last week, the price of bitcoin soared almost 20 percent in its best day since the height of the 2017 bubble, and breaking $5,000 for the first time since mid-November, though analysts and traders admitted they were puzzled by the surge.

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Since 2017, the cryptocurrency sector has faced heavy scrutiny in China when regulators first began to ban initial coin offerings as well as shut down local cryptocurrency trading exchanges.

The government body recommended that cryptocurrency mining should be eliminated in the country as it is a waste of resources. This mining has been known to be energy intensive, with some countries and regions around the world adopting several measures to curb the activity. The nation happens to be leading in cryptocurrency mining. While cryptocurrency mining might require large amounts of electricity, Bitcoiners often argue it's not necessarily wasteful or polluting.

Chinese Bitcoin investor, Chandler Guo, at a Bitcoin mining farm in Guangdong (Image: Twitter).

However, the two largest, Bitmain Technologies, the world's largest manufacturer of bitcoin mining gear, and Canaan Inc, have since let their applications lapse. The intertwined relationships between mining companies and local governments make it hard if not impossible to enforce effectively the ban, according to Zhong.

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