China Authority To Contain Bitcoin Mining By Limiting Power Supply
China’s bitcoin miners have been in limbo since Beijing shut down exchanges in September 2017.
In these days, they may be on an emotional roller coaster as rumor goes that bitcoin mining farms in China shall be shut down within a time limit upon China central bank’s closed-door meeting on January 3, which soon drew great attention with panics.
While according to an insider, the said closed-door meeting did not demand all bitcoin mining farms be shut down, but to regularize those mining farms with abnormal power use or stealing electricity. A bitcoin mining farm owner from Sichuan also revealed that the country is currently conducting strict investigating, it is required that bitcoin mining farms shall go through business registration and power use be regulated.
A source told the Paper News,
On January 2, the Office of the Leading Group of Beijing Internet Financial Risks Remediation issued documents telling local governments to rationally guide enterprises to orderly retreat from the bitcoin mining business and regularly report work progress. As early as last November, the Office had held a meeting with the aim of guiding mining farms to pull off from the market.
Note that it is stated as “rationally guide” but not a mandatory measure for local authorities to shut down mining farms.
Then on January 3, it was circulated that China central bank were holding a close-door meeting to shut down bitcoin mining farms. While an anonymous insider said, the said above is not exactly true.
“China’s central bank tells local governments to regulate the power use of bitcoin mining farms to gradually reduce the scale of their production. And there shall be no more incentives or premium policies for bitcoin mining farms. Although the People’s Bank of China can’t directly regulate bitcoin miners’ power usage, it can ask local governments to do so.”
A man close to central bank said,
“The Bitcoin trading platform has been shut down in China. It is an unrecognized area, the same with the mining-related peripheral industry. The spirit is to guard against risks and serve the real economy. While bitcoin mining does not serve the real economy.”
“There are many irregularities such as environmental problems, potential safety issues and operation without business registration in the current bitcoin mining industry. Therefore, departments are making joint effort to rectify this.”
At present, China’s mining output ranks the first in the world and accounts for 80% of the total share. Complex mathematical puzzles were solved with mining rigs in those mining farms in order to be awarded virtual coins as bitcoin. The intensive use of mining rigs for bitcoin mining has boosted great demand for electricity. Many mining farms insist rooting in China despite the September ban mainly for the reason of lower costs and electricity price in central and western China.
The recent soaring of bitcoin price has boosted the enthusiasm of mining. A anonymous source think that the recent soaring of bitcoin is mainly caused by the outbreak of wars in some countries and unstable political power there. As a result, the credit of countries and their endowment for their currency is unstable. In addition, the USD cannot be freely exchanged in this circumstance, all these explains why many people choose to buy bitcoin on the Internet. But no government would guarantee the stability and security for cryptocurrency, which gives rise to a lot of shortcomings in bitcoin, such as easily stolen or used for illegal activities.
On the same day of January 3, several hours before the news got heat, People’s Daily has released a comment article titled Bitcoin Features Are Just Tool Of Speculation. Now it may be an Aha moment that this may be a sign of the following tightening regulations.
In response to the news, Wu Jihan, Bitmain’s CEO, said,
The mining farms under normal operation will not be shut down, it is those illegal and of electricity theft that are targeted by central bank together with local governments. And those regular mining farms do play a positive role in the local economy, helping some small hydropower plants in underdeveloped areas to repay their loans, which can be seen as a kind of “targeted poverty alleviation”.