Local authorities in Southwest China’s Sichuan Province have shut down almost all of the Bitcoin mining bases in the region in a nationwide crackdown against crypto mining. The ban would mean that more than 90% of China’s Bitcoin mining capacity has been compromised, as Sichuan was one of the country’s largest crypto mining bases.
Last Minute Notice To “Clean Up” Mining Operations
The crackdown in Sichuan happened last Friday when both the Sichuan Provincial Development and Reform Commission and the Sichuan Energy Bureau ordered local electricity companies to shut down mining operations in the region by Sunday. They were further ordered to halt electricity supply to all crypto mining projects. The notice also banned local authorities from approving new mining projects.
The notice listed 26 firms that had been inspected and reported as potential cryptocurrency mining enterprises, including Heishui Kedi Big Data Tech Co and Kangding Guorong Tech Co.
China’s Severe Crypto Regulations Does Not Spare Sichuan
Chinese regulators have been determined to curb speculative crypto trading to control financial risks for some time now. Back in May, senior Chinese officials said that it is necessary to crack down on Bitcoin mining and trading and resolutely prevent the transmission of individual risks to the broader society.
Wang Peng, an assistant professor at the Renmin University of China, said that digital currency trading is being highly regulated globally, including in China. He stated that this was to prevent systemic financial risks and illegal activities such as money laundering.
However, miners and crypto industry leaders in Sichuan had hoped for some leniency, given the abundance of hydroelectric power in the region. However, the ban only further highlights the regulators’ firm resolve as they are willing to forgo the apparent benefits of crypto mining to local economies.
According to Shentu Qingchun, CEO of Shenzhen-based blockchain company BankLedger,
"We had hoped that Sichuan would be an exception during the clampdown as there is an electricity glut there in the rainy season. But Chinese regulators are now taking a uniform approach, which would overhaul and rein in the booming Bitcoin mining industry in China.”
Miners Scramble To Find Alternatives Amidst China’s Severe Crypto Regulations
The Sichuan regulation is not an isolated incident. Earlier Northwest China's Xinjiang Uygur Autonomous Region, North China's Inner Mongolia Autonomous Region and Southwest China's Yunnan Province had all adopted regulations curbing Bitcoin mining.
According to Shentu,
"More than 90 percent of Bitcoin mining capacity, or one-third of the global crypto network's processing power, will be suspended in the short term. As a result, Chinese miners must form alliances to migrate overseas, to places such as North America and Russia"
As per media reports, the last 24 hours have seen a 20-40% drop in hash rates for Chinese companies-backed Bitcoin mining pools, such as Huobi Pool, Binance, and AntPool. An anonymous source stated that miners are scrambling to find overseas mines to conduct their operations.
Shentu also commented that the market might be flooded with mining machines because of the crackdown as the miners would try to get rid of their processing equipment, leading to a drop in their prices.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.