While South Korea raucously cracks down crypto trading, Beijing has quietly ordered the “orderly exit” of the nation’s bitcoin miners, the Wall Street Journal reports.
A multiagency government task force overseeing risks in Internet finance issued a notice last week ordering local authorities to “guide” the shutdown of operations that produce, or “mine,” cryptocurrencies, according to the notice and people familiar with the information.
While the notice called for an “orderly exit” without setting a deadline, far-flung areas of China where cryptocurrency mining operations have flourished are complying. A local regulatory official in the far western region Xinjiang said Wednesday that his agency received the notice and is doing “what the country wants.”
China mines a comically large share of the world’s bitcoin, with the Middle Kingdom reportedly accounting for nearly 80% of the world’s bitcoin mining the past 30 days. Most of these miners operate in sparsely populated areas of the nation, flourishing in areas with cheap electricity and cool temperatures.
Naturally, people are worried about the impact of such a shutdown. “There could be a very high level of disruption,” says Chainanalysis Chief Economist Philip Gradwell, adding that “it’s very hard to estimate back-of-the-envelope how big an impact would be.”
Some however aren’t as worried. BitMEX’s Arthur Hayes says that “some people have already moved their hardware out of China,” while F2Pool founder “Shen Yu” says his company – which accounts for 9% of bitcoin mind the past month – is already very small.
“We are already very small,” said the founder.
Big, small, worried, or not, Chinese miners are reportedly looking at other areas to move their operations.
China’s Bitmain Technologies is eyeing bitcoin mining sites in Quebec, a company spokesman told Reuters, as expectations of a potential Chinese crackdown on cryptocurrency mining make the energy-rich Canadian province an attractive alternative.
Photo: Jim Winstead