The top economic body in China has recommended some new rules that would see the government close down all cryptocurrency mining facilities in the country.
Cryptocurrency mining was one of the industries proposed for immediate elimination, labeling crypto mining as backward processes that are a severe waste of resources.
Cryptocurrency Mining Should Be Eliminated in China
The National Development and Reform Commission (NDRC), China’s top economic body unveiled the proposed amendments to the country’s industrial structure. The paper contains three categories for industries that should be either encouraged, restricted or eliminated.
The government body recommended that cryptocurrency mining should be eliminated in the country as it is a waste of resources. Cryptocurrency mining has been known to be energy intensive, with some countries and regions around the world adopting several measures to curb the activity.
According to the post:
“The elimination categories are mainly backward processes, technologies, equipment and products that do not meet the requirements of relevant laws and regulations, do not have safe production conditions, seriously waste resources, pollute the environment, and need to be eliminated.”
The rules enacted in 2005 in China makes it illegal for Chinese citizens to invest in the eliminated industries. During the elimination period, authorities have the right to raise electricity prices to force those businesses to shut down their operations. In addition to this, the manufacturing, sale, and use of products related to the eliminated industries is also prohibited.
If the government approves this recommendation, then cryptocurrency and the manufacture and sale of mining hardware would be prohibited in the country. This would be a big blow as China is currently home to the largest crypto mining farms in the world due to the low electricity cost in the country.
Chinese miners would have to move their operations to other countries with cheap electricity, something that many would consider being a good thing. At the moment, the accumulation of mining farms in China makes the industry centralized and venturing into other countries would make it more a decentralized sector.
Mining Ban to Follow ICO and Crypto Trading Bans
The Chinese government has taken a tough stance towards cryptocurrencies over the past two years. In September 2017, the People’s Bank of China (PBoC) declared that initial coin offering (ICOs) and other token sales are banned in the country as they are disruptive to China’s economic and financial stability.
Prior to the ICO ban, China was the leading country in the cryptocurrency space, but investment in the emerging market dropped massively following the decisions made by the government. The government further banned all cryptocurrency-related activities in the country, with authorities in Beijing’s Chaoyang district prohibiting all commercial venues from hosting crypto events.
The ban led to cryptocurrency exchanges moving their headquarters to countries like Singapore, Malta, and others with favorable crypto regulations. Xinhua Net, a state-backed media house bragged that China’s crackdown on crypto activities saw Renminbi RMB/ Bitcoin trading drop to below 1 percent of the world’s total, from a high of 90 percent.