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China wants to ban Bitcoin Mining

Published May 1, 2019 3:41 AM

China is considered as the largest market which possesses hardware required for crypto currency mining. Reuters reports that the national development and reform commission (NDRC), reportedly launched Monday a public consultation on a list of industrial activities it wants to encourage, restrict or prohibit. Extracting cryptocurrency would be among the 450 activities that the agency wants to remove either because they "do not comply with regulations, are dangerous, waste resources or pollute the environment".

While it remains very important, China's weight in the bitcoin mining sector has been decreasing for two years. An acceleration of the process would be good news for everyone, especially when it comes to closing facilities based on carbon-based electricity, since this is the reason given. Good news also for the decentralization of Bitcoin, even if one should not confuse "mining installation" and "pool of mining", an activity which is not likely targeted by the authorities and which is still dominated today by Chinese operators.

As announced in this consultation, the industrial activities to be phased out are activities that "waste resources and pollute the environment", now, the mining of cryptocurrencies is an activity that is very energy intensive which consists of powerful computers, operating at length of time, perform calculation operations in order to be rewarded in return by a fragment of this virtual currency.

This industry has long been tolerated in China, so much so that the country holds the number one position in the crypto-active production market. According to “Les Échos”, the Chinese state would host more than half of the world's mining power.

Even so, would it be such a bad thing?

Among the things accused of Bitcoin, no doubt figure the problem of centralization of its mining: in China precisely! And it is also valid for many crypto Proof-of-Work (PoW), Chinese mining pools often dominate the hashrate, which does not say much about their real power on Bitcoin.

Since the main manufacturers of specialized mining machinery (ASIC) are Chinese - Bitmain and Canaan - it is quite logical that mining farms have flourished in the country.

Cryptominers (non-Chinese) realizing the possible disappearance of more than three quarters of the competition! Less centralization, how the people of Bitcoin could not cheer such good news: ban, gentlemen of the Chinese government, it will do more for others!

Still in the flight ahead of the game of cat and mouse, a number of Chinese mining farms have already relocated elsewhere (in Canada in particular).

If this decision were to be recorded by the Chinese government, it would be the gateway to a transition to other countries. If so, it could be a blow for market players that could have a strong impact on the price of Bitcoin, as well as other cryptocurrencies.

It should be noted that this is not the first time that a rumor of prohibition has been circulating and that, until now, announcements from China have not always been followed up.