This week, the Chinese government intensified its efforts to stop bitcoin mining by calling for all the task forces to “actively guide” in the closure of bitcoin mining operations. According to a Wall Street Journal report, the notice by Chinese authorities called for an “orderly exit with no specific deadline. The report further stated that the reason for the intensification of China’s efforts against bitcoin mining was because it “consumes a large amount of electricity and also encourages a spirit of speculation in virtual currencies.” On the same note, the Chinese authorities believe that bitcoin mining is among a host of activities that are not particularly in line with the needs of the real economy.
Chinese government officials have been asked to wield a policy ax on bitcoin which implies that they will be required to cite or promulgate regulations to limit aspects of bitcoin mining such as land use, electricity consumption, environmental regulation and tax collection.
The Role of China in the World of Bitcoin
To put the importance of China in the bitcoin ecosystem into perspective, we can take a look at the last month of 2017 when China accounted for 80% of all the bitcoins mined in the world. These impressive percentages are mostly attributed to the numerous advantages that the country offers to bitcoin manners including cheap electricity as well as centralized mining operations, both of which are key sustainers of the price of bitcoin.
Will Global Bitcoin Mining Operations Take a Hit?
Regardless of all the perks of operating within China, bitcoin mining operations will not have a lot of trouble once the crackdown begins.
In fact, a number of renowned bitcoin mining operations have already exited China and moved to other areas that offer nearly the same advantages that China offered. A great example is Bitmain, which is considered to be the largest bitcoin mining pool in the world, that recently set up shop in Inner Mongolia.
Some other mining operations are moving to cooler climes and according to numerous reports, Canada seems to be one of the locations that will benefit from the migration of mining operations. Meanwhile, since the Chinese government did not issue any strict deadline pertaining to the “orderly exit,” the price of bitcoin will not experience any radical volatility.