China considers Bitcoin mining as a wasteful use of energy and wants to shut it down. It is seen as a sign of mounting pressure on cryptocurrency sector in the country. It's also a bit ironic as China is currently the largest market for computer mining hardware in the world today.
In a revised clampdown on this sector The National Development and Reform Commission (NDRC) is currently seeking public opinions on a list of industry it seeks to encourage, restrict or eliminate as per Reuters. This list was first published in 2011 and has been revised recently.
The draft for a revised list added cryptocurrency mining, including that of bitcoin, to over 450 activities the NDRC said should be phased out as they did not adhere to relevant laws and regulations, were unsafe, wasted resources or polluted the environment.
It did not stipulate a target date or plan for how to eliminate bitcoin mining, meaning that such activities should be phased out immediately, the document said. The public has until May 7 to comment on the draft.
State-owned newspaper Securities Times said on Tuesday that the draft list “distinctly reflects the attitude of the country’s industrial policy” towards the cryptocurrency industry.
In 2017 China banned ICOs and shut down local cryptocurrency exchanges. Additionally it also began forcing many mining firms to consider moving out of the country. Now it's renewed interest in banning mining may cause further issues in the sector.
According to Canaan’s IPO prospectus filed last year, sales of blockchain hardware primarily for crypto currency mining in China were worth 8.7 billion yuan ($1.30 billion) in 2017, 45 percent of global sales by value.
Recently Bitcoin has moved up to a high of $5300 and has once again garnered interest of authorities. Even as China considers banning Bitcoin mining, a government agency, "The Center for Information and Industry Development (CCID)" which works under China’s Ministry of Industry and Information Technology has been rating cryptocurrencies on a regular basis.
It's hard to say which way things will move as China's ban on Bitcoin mining could snap us out of any bull run in the future according to CCN.
That's because China currently dominates Bitcoin mining and these moves are likely to shift mining to other countries. Eventually the prices and market will stabilise again but if the ban indeed goes into effect it will cause more problems in a market struggling to come out of the bear run.
However, for many observing the market this move is not surprising and was rather anticipated and therefore my expectation is that things will just go on whether China story includes cryptocurrencies or not.
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