Monday, June 17, 2019

China Makes a Call on Cryptocurrency Mining

Just when we thought we’ve heard the last from China regarding cryptocurrencies, the East Asian country wants to categorize cryptocurrency mining as eliminated. It could lead to the potential ban of Bitcoin mining in the country and many are still uncertain how that will negatively impact on Bitcoin.

70 Percent of Mining Activities are Carried out in China

70 percent of mining activities are carried out in China and a good number of mining farms are clustered around the mountains of Sichuan. This is a region whose hydroelectric power offers cheap electricity which helps to cut down the cost of mining Bitcoin.

However, the National Development and Reform Commission (NDRC) revealed on April 8 that it wants the public’s opinion on its revised list of industries which it wants to either encourage, restrict, or eliminate. It just so happens that the cryptocurrency mining industry also falls on the revised list and under the section of those that are undesirable and are to be “eliminated”.

Crypto Mining is Unsafe and Leads to Wastage of Resources

According to the NDRC, cryptocurrency mining alongside 450 other activities that are to be eliminated, make use of techniques, products, and technology that are either unsafe, lead to the wastage of resources, pollute the environment or do not adhere to the rules and regulation of the country. When one thinks about Bitcoin mining, it kind of checks almost all the reasons on the list.

For starters, a lot of energy is required to mine Bitcoin and the fumes from the generators powering these mining farms create 3 to 15 ton of Carbon dioxide that is released to the environment every year. In the area of being unsafe and not meeting regulations, it is still uncertain how this activity falls into that aspect.

Date for Eliminating Bitcoin Mining has Not Been Fixed

Nevertheless, the NDRC has not set a fixed date which its plans on eliminating Bitcoin mining. According to its document, it means that the activity should be banned immediately. The NDRC has also given the public until May 7 to reveal its stance about its list.

Jehan Chu, managing partner at blockchain investment firm Kenetic who made comments said:

The NDRC’s move is in line overall with China’s desire to control different layers of the rapidly growing crypto industry, and does not yet signal a major shift in policy… I believe China simply wants to ‘reboot’ the crypto industry into one that they have oversight on, the same approach they took with the Internet

Coindesk, on the other hand, has reviewed what the NDRC means by an industry being eliminated. The cryptocurrency website revealed that even if the commission’s plans are finalized, it will not lead to an immediate ban on cryptocurrency mining. It added that there were industries in the past which were also categorized as eliminated but were later recategorized. This was because phasing them out conflicts with locals interest.

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