Wednesday, July 15, 2020

China Could Ban Bitcoin Mining in the Country

If there is one major means through which people acquire cryptocurrencies, it is by mining them. Miners can either purchase personal hardware for this purpose, or they rent on mining farms or rigs which are being maintained by other administrators. These mining rigs or devices are usually very expensive and consume a lot of power depending on their capabilities and hash rate.

While major developed countries have their fair share of the sentimental impact they make on cryptocurrencies and their prices, the cryptocurrency market suffered a blow on Tuesday when a pioneer state agency in China recommended that the government placed a ban on the mining of bitcoin and other related cryptocurrencies.

Why Now?

The National Development and Reform Commission (NDRC), has a list of industrial activities they plan to curtail, and cryptocurrency mining has recently been added to that list. This was as a result of their non-compliance to the current laws in place to guide their activities, and these same activities are becoming a drain on the environment in general. The activity, when directly translated reads “(production process of virtual currency such as bitcoin) virtual currency ‘mining’ activities.”

As reported by Reuters, Securities Times – the state-owned newspaper, revealed that the draft of the list reflects the country’s industrial policies’ attitude towards the digital currency industry. This drafting follows the government’s decision in 2017 to ban Initial Coin Offering (ICOs) – used in crowdfunding for crypto-related operations and their incessant attempt to shut down local cryptocurrency exchanges.

china flag

Nonetheless, the co-founder of CryptoCompare, Charles Hayter said that should the Chinese government move forward with the NDRC’s recommendation, they would definitely face several challenges before fully enforcing the policy. He stated that some examples would be made, but despite that, the use of Virtual Private Networks (VPN) would make cryptocurrency mining impossible to blot out.

Generally, the mining of bitcoin has been a source of concern and debate amongst critics who incessantly state the negative impact mining of cryptocurrencies have on global energy resources. As reported by the Bitcoin Consumption Index, the energy required to mine bitcoin is enough to power the entire Bangladesh.

However, some other surveys and statistics have debunked this notion, pointing out that about 80% of Bitcoin is mined on renewable energy making it eco-friendlier than any other industry in the world.

Still, this news has had its negative effect on the cryptocurrency industry which took a dip following its short rise amidst the bearish market movement which started a couple of months back.

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