First exchanges, now mining companies. Leaked documents from China’s Internet Finance department suggest that China government is planning on completely banning Bitcoin mining.
For the last years, China was the most prominent player on the cryptocurrency market – most of the exchanges, as well as markets, were located there. Right now it is the biggest hub for Bitcoin mining due to low energy prices. China’s mining companies are covering around 70% of the whole Bitcoin network.
The national government though seems unhappy about those numbers. In the past six months, they have been slowly killing the blockchain industry. Starting with banning ICOs, and then shutting down the exchanges, the government moves have had some impact on the whole cryptocurrency market, but not as big as killing mining would.
The consequences are far and broad. First of all, shutting down this enormous number of mining companies will slow down the transaction times, which leads directly to higher fees. Even relocating the mines to different countries won’t solve the problem, since it will be hard to find a location with similar energy access and price. Also, the alleged regulation will extend the time needed to mine new Bitcoin, which will quickly result in a price surge – that is probably good news for holders, although not the best news for the vision of replacing fiat money with digital currency.
As the document suggests, the decision of banning mining have been taken back in November and the official statement is expected to be issued on January 10th.
Last modified: January 8, 2018
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