China intends to eliminate bitcoin mining in the country. China Bitcoin mining ban comes as a sign of a growing government pressure on the cryptocurrency sector.
The National Development and Reform Commission (NDRC) of China on Monday submitted a revised list of industries that it wants to encourage, limit or eliminate, expecting for public opinion about its initiative.
For the first time, a similar list was published in 2011. In the draft revised list this week, mining of cryptocurrencies, including bitcoins, was added to more than 450 activities that, according to the NDRC, should be curtailed because they did not adhere to relevant laws and regulations, were unsafe and wasted. resources or pollute the environment.
The document does not indicate a specific date or plan to eliminate bitcoin mining, which means that such actions should be stopped immediately, the document says. The public should comment on the project until May 7. The state newspaper said on Tuesday that the draft list “clearly reflects the attitude of the country’s industrial policy” to the cryptocurrency industry.
Mining in China is a very common thing
According to the local bitcoin traders, China bitcoin mining ban does not come as a surprise. “Bitcoin mining wastes a lot of electricity,” said one Chinese bitcoin trader who due to the sensitivity of the situation decided to remain anonymous.
The country is the world’s largest market for computer equipment for crypto mining, although such actions previously fell within the scope of regulation.
In addition, a recent Cambridge University study showed that about half of the mining pools of bitcoins are located in the Asia-Pacific region, including China.
Alex de Vries, a PwC consultant in Amsterdam who specializes in the blockchain and is researching mining cryptocurrency, noted, that “half of the network is probably located in China.” The PwC consultant added that the number of mining facilities in the world is still limited to a few hundred.
Crypto regulations in China remain strict
The cryptocurrency sector has been under the scrutiny of China since 2017 when regulators began to prohibit the ICO and closed the local cryptocurrency exchanges. China also began to restrict the release of cryptocurrencies, forcing many firms, including some of the largest in the world, to find bases in other places.
Jehan Chu, managing partner at blockchain investment firm Kenetic during one of his recent interviews shared his thoughts on the China bitcoin mining ban initiative:
“The NDRC’s move is in line overall with China’s desire to control different layers of the rapidly growing crypto industry and does not yet signal a major shift in policy. I believe China simply wants to ‘reboot’ the crypto industry into one that they have oversight on, the same approach they took with the Internet.”
The impact of China bitcoin mining ban on crypto space
Bitcoin, which accounts for about half of the cryptocurrency market, in spite of being actively searched in Google, fell by about 1.4 percent on Tuesday, while other large coins, such as Ethereum and XRP Ripple, also fell by the same amount. Traders in London said it was unclear how much the Chinese move was putting pressure on the market.
Mati Greenspan, an eToro analyst in Israel, said that China bitcoin mining ban
will reduce the main supply of cheap electricity for the industry and increase the average cost of mining bitcoins. In addition, China bitcoin mining ban will also affect local companies that are among the largest manufacturers of mining equipment for bitcoins.
Last year, three companies applied for an initial public offering in Hong Kong, seeking to raise billions of dollars. However, the two largest companies – Bitmain Technologies and Canaan Inc have already withdrawn their applications.
Bitmain declined to comment on the NDRC proposal to ban mining of bitcoins. Canaan Inc also did not respond to requests for comment.