China Wants to Completely Ban Cryptocurrency Mining
Ron Perillo / 2 years ago
Is This the End of China’s Cryptomining Dominance?
China’s National Development and Reform Commission (NDRC) recently proposed amendments to its guidance for adjustments to the nation’s industrial structure. It just so happens that this includes a proposal to eliminate the cryptocurrency mining sector immediately.
Considering China is home to the world’s largest cryptocurrency mining farms, this move is quite shocking. These farms are able to operate and host massive warehouses with thousands of rigs in place.
These are located mostly in Inner Mongolia and Xinjiang regions where electricity is the cheapest. Some even deploy cryptomining farms in Southern Yunnan and Sichuan province during the rainy season, to take advantage of even cheaper hydroelectric power.
The country is also estimated to take up 71% of the world’s mining hash power, with India a far distant second at 4%. It also helps that most of the hardware in these farms are from China and worth billions. Moreover, 90% of crypto trading is within the country. So you can imagine how drastic this ban would be in terms of its effect on the economy.
Why Does China Want to Ban Cryptomining?
The proposed changes in particular are targeting industries considered to be wasting energy or polluting the environment. The country’s Cabinet originally set these rules back in 2005. However, clampdown has only begun within the last few years.
In 2017, the country banned cryptocurrency exchanges that served local customers. Also, the country’s top internet-finance regulator issued a notice demanding companies carry out an “orderly exit” from the crypto business. He cites risk of speculation of virtual currencies, according to internal documents leaked online at the time.
The proposed amendments are currently under public consultation until May 7.