Heavyweight cryptocurrency mining, with an estimated share between 70% and 80% worldwide, China is planning to ban this activity deemed too energy-intensive.
The world’s first bitcoin “producer” because of its gigantic computer server farms used for the “mining” of cryptocurrency, China plans to ban this activity considered too polluting. China’s leading economic planning authority, the National Development and Reform Commission (NDRC), has published a list of industrial activities that the government wants to restrict or ban, according to the South China Morning Post.
The project submitted Monday (in Chinese only), subject to public consultation until May 7, includes the mining of cryptocurrencies, including bitcoin, among the 450 activities that CNDR considers incompatible with the laws and regulations in force or insufficiently safe or too polluting and wasting resources.
China’s share of bitcoin mining is estimated at between 70% and 80% globally. The country is also the leading producer of “mining” equipment (chips, computers, server racks, etc.).
According to the local press, this new list “reflects the country’s industrial policy” in terms of cryptocurrencies. The ban could come just after the end of the consultation.
“I believe that China simply wants to” reboot “the cryptos sector for control, an approach consistent with the one it has adopted for the internet,” said Jehan Chu, partner of the Kenetic investment firm, questioned by Reuters.
Difficulty of the giant Bitmain
This project also revives the debate on the electricity consumption of cryptocurrency mining, which requires very significant computing resources to solve the mathematical puzzles that validate the creation of “blocks” on the blockchain of bitcoin. The French consulting firm Blockchain Partner has recently published a study on preconceived ideas about the ecological impact of blockchains and crypto-currencies. The excessive concentration of mining in China is also a point that is debated within the crypto community, committed to the intrinsic decentralization of Blockchain technology.
China, which had already banned platform trading and initial coin offerings (ICO) in 2017, has begun to limit mining, forcing many specialized companies, which have so far benefited from very low prices. low electricity, especially from large dams, to relocate part of their activities and review their projects. This prohibition may put them even more in difficulty.
The Beijing-based giant Bitmain, which designs special chips (ASIC) and controls the powerful Antpool coal mining group and dozens of mining farms in Sichuan, Xinjiang and Inner Mongolia, had set up operations in the United States, Canada . He has also diversified into chips dedicated to artificial intelligence. Bitmain, however, had to give up last month to its IPO in Hong Kong which was to value $ 18 billion and allow him to raise about 3 billion. The group has already raised over $ 760 million since its creation, including $ 400 million in August 2018 from major investors such as Singapore’s sovereign wealth fund Temasek. But the drop in demand, correlated with the fall in prices of cryptocurrencies, led to losses and firing. He announced at the end of March that his two co-founders were resigning as co-directors, remaining directors.
“We recognize that despite the enormous potential of cryptocurrencies and the Blockchain industry, this remains a relatively young sector that is still demonstrating its value,” commented Bitmain on its blog on March 26.
The announcement of this potential ban on mining has however not affected the price of bitcoin, which has been improving for about ten days and exceeds $ 5,200, its highest level since last November. It lost more than 70% of its value last year.