China's Cracking Down on Bitcoin Miners

By Adam Robbins, January 12, 2018

0 0

Bitcoin miners in northwest Xinjiang province have been instructed to report in by the fifth of each month as the local government moves to “guide miners toward an ‘orderly' exit from the business.” First reported by news.bitcoin.com, the notice was signed by the Xinjiang Commission of Economy and Information Technology on January 4 and has been 'verified by people familiar with the matter.'

xinjiang.jpeg

The move to restrict mining of the popular cryptocurrency appears to follow a January 2 directive from the Financial Market of the People’s Bank of China. The notice instructs that “local governments shall coordinate with multiple departments to take actions concerning electricity price, land use, tax and environmental protection in an effort to guide miners to an orderly exit.”

the-pboc.jpeg

The concerns make some sense. The complicated calculations behind bitcoin transactions demand great computing power, which in turn requires massive amounts of electricity. Even as China develops cleaner energy, the majority of the country’s power comes from coal, at a heavy cost to human lives and the environment. So weaning China’s entrepreneurs off bitcoin could reduce the demand for electricity and help China burn less coal.

READ MORE: Why Beijing is Leading China's Bitcoin Revolution

But if Xinjiang is the start of a new trend among local governments, it could have devastating effects on a market with a total value over USD230 billion.

China’s miners account for about 70 percent of all the world’s cryptocurrency mining. If that capacity is wiped out, it will do more than just slow the discovery of new bitcoins. It would dramatically slow down the transfer of existing bitcoins, since each transaction requires the calculations of the miners to confirm the trade. 

This is just the latest threat of a Chinese crypto crackdown to circulate online. Last November it was a heavy-handed decree from the Sichuan Electric Power Company demanding that miners “stop bitcoin production.” The company later walked it back, saying it only intended to direct regional hydropower stations to give greater priority to local demand. Before that, it was a talk of a comprehensive ban on bitcoin exchanges. That one turned out to be mostly true. 

Miners can set up shop beyond China’s borders to escape the regulations, and many are. When electricity costs make up 75 percent of a miner’s expenses it’s hard to beat China, where it can be as cheap as RMB0.3 (USD0.05) per kilowatt-hour in the rural west. But for China’s cryptocurrency miners, those cheap rates could soon be a thing of the past.

[Images via news.bitcoin.com, newstrendstoday.com]

more news

Pets Now Allowed in the Cabin on Hainan Airlines China Flights

Terrific news for pet owners! (And bad news for travelers with allergies).

Massive East China Sea Oil Spill Triples in Size

The oil slicks now cover an area of over 300 square kilometers, according to China's State Oceanic Administration (SOA).

Oil Spill Fears as Ships Collide by China Coast, 31 Still Missing

China is rushing to prevent an oil spill disaster after two vessels collided, with one confirmed dead and 31 still missing.

Burning Oil Tanker Sinks Off China Coast, No Hope of Survivors

Officials say 30 missing crew members are presumed dead after an oil tanker exploded and sank on Sunday.

Oil Spill Spreads in East China Sea, Could be Worst in Decades

China is racing to prevent an environmental disaster as four separate oil slicks spotted in East China Sea following tanker sinking.

Are Corporate VPNs Getting Disrupted in China?

International companies and organizations in China — including two European embassies — have allegedly experienced VPN disruptions, the Financial Times reports.

Explainer: Why Winter is the Most Polluted Time of Year in China

'Tis the season for pollution and facemasks.

¥214m in Fake Banknotes Seized in South China Sting

Authorities in Guangdong province have captured 14 individuals suspected of involvement in a counterfeit banknote ring.

0 User Comments

In Case You Missed It…

We're on WeChat!

Scan our QR Code at right or follow us at thatsonline for events, guides, giveaways and much more!

7 Days in China With thatsmags.com

Weekly updates to your email inbox every Wednesday

Subscribe

Download previous issues

Never miss an issue of That's Magazines!

Visit the archives

Get the App. Your essential China city companion.