China’s state planner wants to eliminate bitcoin mining in the country, according to a draft list of industrial activities the agency is seeking to stop in a sign of growing government pressure on the cryptocurrency sector.
China is the world’s largest market for computer hardware designed to mine bitcoin and other cryptocurrencies, even though such activities previously fell under a regulatory grey area.
The national development and reform commission (NDRC) said on Monday it was seeking public opinions on a revised list of industries it wants to encourage, restrict or eliminate. The list was first published in 2011.
The draft for a revised list added cryptocurrency mining, including that of bitcoin, to more than 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 7 May to comment on the draft.
Bitcoin traders said they were not surprised by the government’s move. “Bitcoin mining wastes a lot of electricity,” said one Chinese bitcoin trader who declined to be named due to the sensitivity of the situation.
Last week, the price of bitcoin soared nearly 20% in its best day since the height of the 2017 bubble, and breaking $5,000 for the first time since mid-November, though analysts and traders admitted they were puzzled by the surge.
Bitcoin, which accounts for about half of the cryptocurrency market, was down by about 1.4% on Tuesday, while other major coins such as Ethereum and Ripple’s XRP also fell by similar amounts. Traders in London said it was unclear how much the Chinese move was weighing on the market.
The cryptocurrency sector has been under heavy scrutiny in China since 2017, when regulators started to ban initial coin offerings and shut local cryptocurrency trading exchanges.
China also began to limit cryptocurrency mining, forcing many firms – among them some of the world’s largest – to find bases elsewhere.
Nearly half of bitcoin mining pools – groups of miners that team up for economies of scale – are located in the Asia Pacific, a Cambridge University study said in December.