Technology 3 min read

China to Ban Cryptocurrency Mining

In a recent press release, an official Chinese government body has announced its desire to reduce the level of crypto mining within the country.

Pixabay

Pixabay

Iceland might be currently the best place to mine cryptocurrencies for its cold weather and cheap electricity, but China dominates the global crypto mining industry.

After being pushed over by Japan as the largest bitcoin market, China may also lose the title of the largest market for crypto mining computer hardware.

The fact that China is home to a large industry around cryptocurrency mining equipment and large mining farms doesn’t ensure crypto mining’s longevity in the country.

The Chinese central government has a list of industries that it wants either to encourage, to restrict or to eliminate.

Now, we can add bitcoin mining to the list, under the “to eliminate” category of industries.

China Wants to Phase out Bitcoin Mining

China’s National Development and Reform Commission (NDRC) is the planning agency that identifies strategies and opportunities for Chinese socio-economic development.

By coordinating action between sectors, regulating investment, and providing recommendations to policymakers, the NDRC has a strong say over Chinese economic decision-making.

So, when the NDRC says that the mining of bitcoin and other cryptocurrencies could hurt the Chinese economy, it’s pretty much a done deal the activity would be phased out.

Since 2011, NDRC has annually released an update of the industries it wants to encourage, restrict or eliminate, either because they breach laws, are considered dangerous, waste resources, or harm the environment.

Per Reuters, in this year’s draft list that counts 450 industrial activities, the NDRC recommends the cryptocurrency mining activity to be eliminated because it’s energy wasteful.

For crypto miners and experts who’ve been following the government’s rising pressures on the activity, this move didn’t come as a surprise at all.

Nearly three-quarters of all cryptocurrencies mined in the world use the Chinese power grid and gear, accounting for millions of tons of carbon released into the air.

About half the world’s network of crypto mining facilities exist in China. Now, crypto miners have to move their power-hungry hardware elsewhere where electricity is affordable.

We still don’t know the reaction of the Chinese manufacturers of cryptocurrencies mining hardware such as Bitmain Technologies, but it will likely lead to swift business changes.

Read More: Cryptocurrency Mining is Hampering the Search for Alien Life

But what are China’s motives for wanting to shut down a lucrative sector over which it exerts such dominance?

Jehan Chu, managing partner at blockchain investment firm Kenetic, has this to say:

“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.”

So it might all come down to China’s obsession to control, and that explains why artificial intelligence, unlike bitcoin, benefits from the state’s full commitment. AI is an industry to be encouraged in China because AI agents are good at controlling and monitoring people.

Read More: China to Install “AI Guards” in Prison Cells

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Zayan Guedim

Trilingual poet, investigative journalist, and novelist. Zed loves tackling the big existential questions and all-things quantum.

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