The Chinese government agency responsible for macroeconomic policy has labeled Bitcoin mining as an “undesirable” industry and recommends that local authorities eliminate this sector in the country.
On Monday, the National Development and Reform Commission of China (NDRC) published a draft proposal for revising the existing Industry Restructuring Catalog, which lists the industries that the agency recommends encouraging, restricting or terminating.
The revised catalog has not yet entered into force, but classifies Bitcoin mining as an industrial sector that is not encouraged in the future development of the country.
Until May 7, the public will have the opportunity to share feedback on the proposed amendments, after which the final version will be published and take effect.
Recall that China is home to the world's largest cryptocurrency farms, thanks to cheap electricity in the coal-rich regions of the country – Xinjiang and Inner Mongolia. It is known that in recent months, Chinese miners have launched farms in the southern provinces of Yunnan and Sichuan in order to use even cheaper electricity available at the local hydroelectric station in the rainy season.
Michael Jun, an analyst at TokenInsight, a Beijing-based cryptocurrency research company, said:
If the new rules are adopted, the Chinese miners will have to abandon their bases in Yunnan and Sichuan and move operations to foreign countries.
Bitcoin mining will no longer dominate China, but will become more decentralized.
This is not the first time that the authorities are cracking down on the mining of cryptocurrency. Last January, the main Chinese regulator of Internet finance issued a notice demanding that companies “orderly exit” from business, citing the risk of speculation in virtual currencies, according to internal documents leaked at that time. Although this order was not executed, it prompted many local miners to look for backup options in countries such as the USA and Canada.
In addition to the immediate risk for mining farms, new rules also create uncertainty for Chinese manufacturers of mining equipment, including Beijing-based Bitmain Technologies, which in 2017 controlled about three-quarters of the global market. Bitmain has so far refused to comment on this topic.
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