Several times in recent months China has expressed its willingness to ban cryptocurrency mining on Asian soil. Currently, in fact, most of the mining farms are located in China where, thanks to the very low or even zero cost of electricity, have allowed miners to obtain substantial income, even when bitcoin had sunk below $4,000.
The Asian country would be considering a total ban on cryptocurrency mining for two main reasons. In fact, according to the National Development Reform Commission (NDRC), cryptocurrency mining is a dangerous operation for the country’s economy.
The agency also stated that mining can cause significant environmental damage, due to increasing energy consumption.
China and the cryptocurrency mining ban
The country’s authorities are already taking action to reduce illegal mining operations, which have increased abruptly with the recent growth in the value of bitcoin and other cryptocurrencies.
More than a dozen suspects have recently been arrested in the Chinese province of Jiangsu. The union that deals with the monitoring of electricity theft has in fact discovered a large mining farm with as many as 4 thousand ASICs. According to statements, the local electricity provider has suffered losses of tens of millions of yuan as a result of illegal mining.
The local authorities would also be struggling with the construction of new mining farms in the Sichuan region. The area, in fact, boasts more than 25 operating hydroelectric dams that generate low-cost energy during the rainy season.
The fight against illegal mining farms is now becoming a major problem for the Chinese government. Since China and the United States are also engaged in a trade war that threatens China’s economy and the national currency, the Asian country fears that cryptocurrency mining activities may trigger a further outflow of capital.
According to the International Monetary Fund (IMF), the country’s economic growth prospects for 2019 fell to 6.2% from 6.6% last year. It is also expected to shrink further to 6.0% in 2020. Many people think that the current economic situation and fears for the future are partly driving the popular adoption of cryptocurrencies, seen by many as a store of value for the future.
According to a recent statement by XBTO CEO Philippe Bekhazi, digital currencies are slowly gaining ground among the country’s entrepreneurs.
The Chinese government, therefore, could soon take even more stringent measures towards the cryptocurrency world.