When it comes to China, little is completely clear, and the country’s recent attacks on cryptocurrency are no exception. The Prime Minister’s Commission on Financial Stability and Development on May 21 said it was cutting bitcoin (BTC) mining due to economic risks, prompting the South China Morning Post to state that “China’s place in the global mining hub for bitcoin is undermined.”
“We see the cryptocurrency market embarking on a ‘cleaning up China’ path – first in terms of trade and now in terms of computing power, based on a series of more decisive steps taken by Beijing against cryptocurrency and bitcoin mining in the past week.” said Wang Guan, a partner professor at Blockchain. at Xi’an Jiaotong University and a member of the OECD Blockchain Policy Advisory Board for publication.
Or maybe not. Darren Feinstein, founder and CEO of Blockcap – one of the largest cryptocurrency mining companies in North America – is not entirely sure if Bitcoin mining is complete in China, the world’s current mining hub. In 2017, China made a similar announcement, he told Cointelegraph and explained:
“Following this announcement, another company I founded, Core Scientific, entered into several contracts with Chinese miners to help them move a small percentage of miners to the United States. None of these agreements have been implemented, and all of these miners continue to fall in China to this day. “.
Three miners – BTC.TOP, Huobi and HashCow – have nevertheless announced the closure of stores on the mainland, and Chinese expert Bill Bishop reports in his Sinocism newsletter that the government of eight countries is developing measures against mining in Inner Mongolia. It was “difficult” and “it would be very difficult to think that this is just a temporary measure and that everything will return to normal relatively soon.” Other provinces and regions, including Sichuan and Xinjiang, can follow suit.
No one can be sure of what goes on behind the scenes in China, Feinstein notes, but it’s worth asking: what is the real driving force behind the latest (obviously) cryptographic memory, and why now?
Is it just financial risk aversion, as the government says, or could there be something else involved, including energy / environmental considerations? Will Chinese mining companies now go to sea, and if so, where could new crypto mining centers appear?
Finally, is this another sign that validation of the energy-intensive business protocols that are used in bitcoin and other cryptocurrencies is becoming a growing problem in an environmentally hazardous world?
A threat to “old systems”?
“Control over monetary policy and financial systems is important to the central government, and Bitcoin poses a threat to that,” Ethan Vera, CEO of Luxor Tech, told Cointelegraph, speaking of the new restrictions on mining, adding: being a storehouse of value for the people worldwide. This threatens the old regimes. ”
Yu Xiong, dean of the University of Surrey and head of business analysis at Surrey Business School, cites environmental concerns as the main reason for the move. Countries like China, which announced at some point – in the case of China, by 2060, it would become “carbon neutral”, are now under increasing pressure to “stay away from high-emission sectors.” Xiong told Cointelegraph that Bitcoin mining is a sector that can be easily donated “without huge costs nationally.”
why now? “Bitcoin has grown very quickly in recent times and has influenced the behavior of many investors,” Xiong said, adding, “Governments usually see the sector growing reasonably rather than radically, so some action needs to be taken.”
This is not necessarily the end of mainland mining, but from Xiong’s point of view. Later, this sector may turn into an organized industry. Financially speaking, “They’ve already made money in this round, so now they pay, wait for the price to drop, and then join in again,” he says.
“It’s too early to talk about the real impact of the deputy prime minister’s comments,” Vera said, adding: “This week we saw that our desktops are consuming several hundred megawatts of electricity.” He further explained:
Miners in Inner Mongolia and Xinjiang contacted international suppliers to try and take out the mining equipment immediately. Some Sichuan mining companies have begun to transfer part of their business overseas in order to diversify geopolitical risks. “