Bitcoin mines may move out of China following tightening regulation
Published: May 24, 2021 08:38 PM
Inside a Bitcoin mining factory 
Photo: AFP

Inside a Bitcoin mining factory Photo: AFP

Many Chinese bitcoin mines are considering moving out of China after the regulators re-emphasize plans to outlaw bitcoin-related payment services, although some mines in Southwest China's Sichuan Province are still operating as usual, industry insiders told the Global Times.

One source, who spoke on condition of anonymity, told the Global Times on Monday that China's recent ban on bitcoin-related activity will reshape the landscape of the global mining industry and force more Chinese miners to migrate overseas, such as to the US.

"Chinese miners account for over half of the global crypto network's processing power, and this will also weigh on the development of the global mining industry in the long run," the insider said. 

Cao Yin, managing director of Digital Renaissance Foundation and a bitcoin investor, told the Global Times that as far as he knew, some bitcoin mines in China, particularly those that use thermal power, may move abroad to the US and Canada.

According to Cao, the move started in 2017 but is now speeding up, as mines look for regions with cheaper electricity rates and more friendly policies.

"It's possible that bitcoin mines may eventually move out of China, but production and exports of bitcoin mining machines won't stop in China because of market demands," Cao said. 

There's also been a contraction in websites that offer digital currency services. Digital-asset trading marketplace Huobi China, for example, confirmed to the Global Times on Monday that its bitcoin mining shopping mall has stopped providing services to Chinese mainland-based customers. As to customers who already own bitcoin miners, Huobi China will inform them of solutions at a later time.

These shifts are taking place as Chinese regulators have re-emphasized that the country will restrict bitcoin activity. For example, during a recent meeting convened by the State Council Financial Stability and Development Committees, officials said that the country will strike against bitcoin-related activities to prevent risks from spreading to impact the system.

The People's Bank of China (PBC), China's central bank, issued a statement recently prohibiting financial institutions and payment companies from providing services related to crypto-currencies.

The government's renewed stress on banning bitcoin-related activity has inspired various interpretations on social media, with some attributing the ban to the government's wish to create a better environment for the launch of the official digital currency.

But Cao said that the move is intended to crack down on illegal fundraising schemes in the name of raising money for bitcoin mines.

Also, some bitcoin mines use thermal power sources that can't pass the government's environmental impact assessments, and thus run counter to the country's carbon-neutrality goals, Cao said. According to him, some bitcoin mines in China are now ready to purchase carbon emissions quotas.

"In recent days, crypto-currency trading has been too hot in China which attracted many individual investors. It's necessary that the government rolls out warnings in case any large risks materialize," Cao said.

The bitcoin price has been very volatile in recent days. On Wednesday, the price plunged as much as 30 percent and then surged about 40 percent. It stood at about $36,488 as of press time on Monday. 

However, Cao said that short-term fluctuations won't sway his decision to invest in the crypto-currency, as he believes in the "advantage" of block-chain technology that is represented by the token.

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