- China hosts the largest mining farms due to low electricity and ASIC production costs
- The draft recommends banning of mining activities
- While in the short term a Chinese ban would crash the hashrate, it would likely increase mining decentralization
China’s state planner has added cryptocurrency mining to a list of activities it believes should be phased out. The draft proposal recommends that local governments eliminate the sector’s activities in the world’s most populous country.
The country’s National Development and Reform Commission (NDRC) published a draft proposal on Monday that proposes to revise the existing Catalogue for Guiding Industry Restructuring. The list points out industry activities that the agency feels should be encouraged, restricted or discontinued. The catalogue has categorized Bitcoin mining as an undesirable activity and it should thus be eliminated in the country’s future development.
“Wastes resources and pollutes the environment”
The draft that contains the revised list for activities that agency feels should be phased out for not adhering to the relevant laws and regulations are unsafe, waste resources and pollute the environment include Bitcoin mining among 450 other activities. Since the draft proposal doesn’t specify the targeted date or describe a plan on how Bitcoin mining should be eliminated, it may appear like the proscribed activities could be phased immediately if the draft is passed. The NRDC has given members of the public until May 7, 2019, to forward their comments on the draft proposal.
The NDRC was formally launched in 1998 and is among the 26 cabinet level departments which form the State Council of the Chinese Central Government. The department’s main role is focusing on studying and drafting economic reform strategies and policies. The agency published its first Catalogue for Guiding Industry Restructuring in 2005 that informed local governments on the types of sectors to be encouraged or avoided for future development. The Catalogue was later revised and updated in 2011, 2013, and 2016, respectively, and is now undergoing another revision.
Big blow to Chinese miners
China hosts the world’s largest cryptocurrency mining farms as a result of the affordable electricity in the country’s coal-rich Xinjiang and Inner Mongolia regions and mining rig manufacturers. Chinese Bitcoin miners are said to have relocated their machines to the Southern Yunnan and Sichuan provinces to benefit from the cheaper hydropower that’s available during the rainy seasons.
Should the new rule be enacted, it will be a big blow to Chinese miners as they will be forced to relocate their activities to crypto-friendly countries. Michael Zhong, an analyst with the Beijing-based research firm TokenInsight stated:
“Bitcoin mining will no longer be dominated by China but become more decentralized.”
According to SCMP, This is going to be the second time Chinese authorities are trying to stamp out cryptocurrency mining. The country’s internet finance regulator issued a notice to cryptocurrency mining companies in January last year asking them to undertake an orderly exit, but the order seems not to have been followed through.