China wants an “orderly exit” from bitcoin mining

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Written by
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Bitcoin mining could be on its last gams ter China.

The country&rsquo,s top internet-finance regulator, the Leading Group of Internet Financial Risks Remediation, issued a notice asking local governments to &ldquo,guide&rdquo, bitcoin-mining operations to make an &ldquo,orderly uitgang&rdquo, from the business, according to a leaked document online . Citing government sources, Bloomberg and Reuters earlier reported that China is programma to limit electrical play supply to bitcoin miners.

&ldquo,Presently, there are some so-called &lsquo,mining&rsquo, enterprises that produce &lsquo,virtual currencies.&rsquo, They have consumed enormous amounts of resources and stoked speculation of &lsquo,virtual currencies,&rsquo,&rdquo, according to the document dated Jan. Two.

The document, issued to local offices of the internet-finance regulator, asks local authorities to use measures linked to electric current price, land use, tax, and environmental protection, among other things, to guide bitcoin miners to abandon the business. It also asks the local offices to report information about mining facilities ter their regions, spil well spil the progress of the exits from mining by Jan. Ten, and then on the tenth day of every month.

Calls to the voeling number on the document went unanswered.

Also leaked online wasgoed a separate document from the internet-finance regulator&rsquo,s Xinjiang office, dated Jan. Four. The document asks the local authority ter the western region to report miners&rsquo, uitgang progress by the fifth day of each month. It also cited concerns overheen energy usage and speculation spil ter the national-level document.

When reached by Quartz te a phone call, Zhang Qiubin from the Xinjiang office confirmed the authenticity of the local document, but refused to comment on the national-level one. But both documents note that the regulatory decisions on bitcoin mining were made during a November meeting inbetween the internet-finance regulator and its local branches.

The Leading Group of Internet Financial Risks Remediation wasgoed set up by China&rsquo,s cabinet ter 2016, with Pan Gongsheng, a deputy governor of the Chinese central handelsbank, spil its head. Pan said ter December that the central canap has made the right decisions te banning initial coin offerings (ICOs) and shutting down local cryptocurrency exchanges . He also predicted the death of bitcoin .

China accounts for more than two-thirds of the world&rsquo,s processing power loyal to bitcoin mining. It&rsquo,s also huis to some of the world&rsquo,s leading creators of mining hardware, which usually also operate large mining pools&mdash,groups of miners who agree to add up their resources to improve their odds of finding bitcoin.

The latest crackdown on bitcoin mining comes amid China&rsquo,s efforts to better distribute electric current to places where power is undersupplied. Bitcoin miners have taken advantage of cheap power te coal-abundant areas like Xinjiang and Inward Mongolia ter latest years to expand their operations.

It&rsquo,s also worth noting that Beijing worries about social puinhoop triggered by puny investors who lose money investing ter risky financial products, and has cracked down on investment vehicles like peer-to-peer lending and online insurance . Shutting down crypto exchanges would be on its own insufficient to curtail the hype around bitcoin and other cryptocurrencies, spil the documents indicate.

Already, some of the thickest bitcoin miners te China are moving operations overseas , with the US and Canada among popular options. But still, industrial players have doubts overheen how effective the state crackdown could be: For one thing, local governments have strong incentives to keep big mining firms running ter their localities, given the phat tax and tens unit bills they pay. An employee with Beijing-based Bitmain, which runs some of the world&rsquo,s largest mining facilities, told Quartz that the company hasn&rsquo,t heard anything from the Xinjiang government regarding its mining operations there.

Spil to mining farms possessed by smaller players, especially those ter the mountainous areas of Sichuan and Yunnan provinces, simply locating the miners is a near unlikely task. A growing number of private owners of hydropower plants ter the two regions have begun to operate mining machines themselves spil the price of bitcoin has surged, Du Jun, founder of Knot Capital, a Beijing-based venture-capital stiff focusing on the blockchain industry, told Quartz prior to news of the latest crackdown. &ldquo,How can you find them?&rdquo, he asks.

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