9 Oct, 2019

Bitcoin Mining to be banned in China soon

It has been rumoured for months after Cryptocurrency trade ban in China that Mining will also be banned. Though nothing of that sort happened initially, looks like it might be happening soon. According to a leaked document online, the country’s internet finance department sent out notices to local governments to make plans to make miners “Exit Gradually”.

Mining has been extremely profitable in China because of its access to cheap hardware, skill and electricity. In fact, it is estimated that about 70% of mining happens in China. So a sudden closure of all these Miners will be devastating to the network which is already unable to keep up with the current demand. For this reason, the government has advised a gradual exit.Ad

The document is still very vague. Clearly, they do not want mining in China. They’ve asked local authorities to use measures linked to electricity price, tax and land use. They’ve also asked local offices to report on mining operations in their area and report on the exits of these businesses on the 10th of every month.

This gives an opportunity for mining exchanges to take steps to move out of the country. In fact, most of the bigger exchanges have already laid out plans and have begun moving out. Another thing take a note of is enforcement.

Bitcoin is decentralised in nature, making it hard to track transactions and mining. When China banned Cryptocurrency trading a few months back, the trade volume never went down. Instead, trading just went peer-to-peer. Same way, it will be hard for these agencies to track down mining operations. A lot of them have set up their own hydropower plants for mining in remote regions, making it impossible to track them.

A China ban on Bitcoin mining can be a temporary setback for the currency. The demand will eventually be picked up by other regions around China and rest of the world.