China signals banning of Bitcoin mining
The National Development and Reform Commission (DNRC) of China this week hinted that China could ban Bitcoin mining. The commission proposed that Bitcoin mining should be completely removed from China's financial sector arguing that it falls under the wasteful industries category.
This development comes right after the DNRC produced a list of industries it claims are inefficient, wasteful and polluting. This catalog is expected to help the government in restructuring the industrial sector.
Bitcoin mining has serious ramifications especially when it comes to its energy consumption. Mining of cryptocurrencies consumes lots of energy and its efficiency is questionable. As a result, the industry is becoming too expensive for the economy due to the huge energy requirements.
China is known to have the largest cryptocurrency mining network in the world. Actually, China is currently leading the rest of the world when it comes to the adoption of cryptocurrencies. There are also many cryptocurrency startups in china with the largest blockchain patents in the world.
There are close to 500 Bitcoin mining companies in China and if the ban becomes effective, they could all face termination.
Also, there are a number of other companies that rely heavily on cryptocurrency mining and its ban could seriously affect their very existence. These companies include companies that deal with the manufacturing and distribution of the cryptocurrency mining equipment.
Date of imposing the ban
As at the time of the press release, the government had not given the timeline for effecting the ban. But according to the DNRC, the government should eliminate cryptocurrency mining as soon as possible.
However, the Chinese government doesn’t have any obligation towards accepting DNRC's proposal. It could choose to enforce it or disagree with the proposal. The list of wasteful industries is actually still open for changes. As from May 7, the proposal will be open for public scrutiny and its implementation squarely lies at the hands of the public.
Even so, experts are advising that cryptocurrency mining should find alternative sources of renewable energy and if possible also come up with more efficient mining systems.
Nevertheless, China is known to be very strict with cryptocurrencies. In 2017, the Chinese government banned Initial Coin Offering (ICO) due to lack of proper regulations and increase of fraudulent cases that put the public at a risk. Therefore, the ban of Bitcoin mining is also something that is very much possible especially if the feedback from the public suggests so.