The People’s Republic of China has effectively banned both bitcoin and ICOs and in retrospect it was perhaps inevitable that is now appearing to be clamping down on many different Chinese bitcoin mining operations.
This is not something to be taken lightly in the world of digital currencies as the Chinese miners (both companies as well as individuals) are a very important group indeed, and they are widely estimated to produce no less than a full three-quarters of the entire supply of bitcoin in the whole world!
The Chinese government has its own pressing reasons for the crackdown. As per the state’s internet finance regulator they are convinced that ‘bitcoin miners should make an orderly exit from China because they have consumed huge amounts of resources and stoked speculation of ‘virtual currencies.”
At least, this was the official reason given for this hitherto unprecedented crackdown. First the Chinese government shut down the many exchanges where bitcoin and other cryptocurrencies were freely traded and then it decided to get to, what it perceives to be the root of the problem, by taking the nationwide crackdown substantially further. It is, therefore, actively going for all those facilities where different kinds of such currencies are created or “mined.”
While hitting, exchanges may turn out to be an elusive and stop gap measure at best, but blocking all mining operations can really put a damper on the world’s crypto currency operations. Here, it has found a fairly simple means of hurting miners. By hitting them where it hurts most. I.e. by effectively curtailing the electricity supply of the many cryptocurrency miners and famers in the vast Chinese rural outback.
It is prudent to note that this crackdown has not morphed into a nationwide ban as yet but nevertheless it is arguably the single greatest threat that these miners (and also the dealers of bitcoin the world over) have ever faced.
After all the removal of the largest supplier of bitcoin in the world does have the potential of putting the entire digital currency market into a lethal tailspin.
On the other hand, from the state’s point of view they have sound reasoning for doing so. As the difficulty in mining coins increases, the vast amount of raw power required to produce even a single coin is slowly but surely draining the energy of the entire country. In the key regions where such mining takes place, there had been a surplus of electricity supply so the government had turned a negligent eye to the many miners and farmers in the ‘bitcoin belt.’
However, as the infrastructure needs of the nation have increased, the demand for electricity has surged too. Given a choice between miners and its own infrastructural requirements the state has chosen to opt for the latter.
The fact remains that whichever way we look at it, the era of China’s dominance in the world of bitcoin mining, is effectively coming to a close.