China Considers Ban on Bitcoin Mining – Report

News and Analysis

China’s National Development and Reform Commission (NDRC), a central government agency in charge of formulating macroeconomic policies, has labeled cryptocurrency mining as an “undesirable” industry, recommending local governments to eliminate the sector in the country.

As reported by Reuters, NDRC published a draft proposal on Monday for revising the existing Catalog for Guiding Industry Restructuring, which lists out industry activities that the agency suggests to encourage, restrict and discontinue.

The agency published the first Catalogue for Guiding Industry Restructuring in 2005 to inform local governments on what types of sectors are encouraged, and what are not, for future development. The Catalogue was later revised and updated in 2011, 2013, and 2016, respectively, and is undergoing another revision.

The draft for a revised list added cryptocurrency mining, including that of Bitcoin, to over 450 activities the NDRC said should be phased out as they did not adhere to relevant laws and regulations, were unsafe, wasted resources or polluted the environment.

It did not stipulate a target date or plan for how to eliminate Bitcoin mining, meaning that such activities should be phased out immediately, the document said. The public has until May 7 to comment on the draft.

State-owned newspaper Securities Times said on Tuesday that the draft list “distinctly reflects the attitude of the country’s industrial policy” towards the cryptocurrency industry.

Since the People’s Bank of China (PBoC)’s historic ban on initial coin offerings (ICOs) in September 2017, Chinese authorities has made a series of faltering moves to attempt to cut the country’s crypto mining titans down to size.

Due to the country’s abundance of cheap energy and hardware, reports in previous years had indicated that over two-thirds of global mining pools were based in China. By January 2018, a leaked memo reportedly from the central bank to a top-level government internet finance group advocated for the orderly exit of Bitcoin miners from the country.

Nonetheless, mining has to date not yet been prohibited outright, with industry giants such as Bitmain Technologies operating both in the country and overseas. In late March, Bitmain announced its plans to set up 200,000 units of mining equipment in China to benefit from the country’s low-cost hydroelectric power, even as it contracted its overseas operations.

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