Not only did it renew the crypto ban that prohibits financial institutions from offering services to crypto businesses, but it also introduced a crypto mining ban, which might mean that mining Bitcoin in China is at its end.
Bitcoin in China
As some may know, the majority of Bitcoin is mined in China due to its cheap electricity. The country makes loads of power during its rain seasons, and so it can afford to sell it cheaply, and since crypto mining requires a lot of electricity, the two are a perfect match. At least, as far as miners are concerned. I have a feeling that China doesn’t see things in the exact same way.
Recently, the country’s top fintech magazine, which is quite ‘close’ to the authorities, revealed several reasons why the mining ban was put in place. One reason is that the country’s listed crypto companies do not run their own businesses. Instead, they are buying mining equipment and are becoming crypto mines.
The report also noted that Beijing is becoming increasingly unhappy with Inner Mongolia’s reduction of energy consumption. The consumption is not up to standards, which is why the mining ban is striking there.
Add to the fact that crypto mining is not contributing to the local economy in any real way but is instead taking the power that other businesses could use, and it is easy to understand why China is getting more and more irritated. The country did not have a particularly high opinion of crypto mining and crypto itself to begin with. In fact, its regulators would cancel both mining and Bitcoin altogether if they could.
But, since it is not feasible, they are increasing the measures that will make it a lot more challenging for the miners to continue doing their work, hoping that they might leave on their own, in my opinion.
Do you think that China is right in doing this?