Cryptocurrency Ban in China Forces Some Bitcoin Miners to Flee Overseas, Others Sell Out
A cryptocurrency mining farm operator said, "Mining machines are selling like scrap metal."
China's sweeping ban on cryptocurrency mining has paralysed an industry that accounts for over half of global Bitcoin production, as miners dump machines in despair or seek refuge in places such as Texas or Kazakhstan.
"Many miners are exiting the business to comply with government policies," said Mike Huang, operator of a cryptocurrency mining farm in the southwest province of Sichuan. pg slot
"Mining machines are selling like scrap metal."
The local government of Sichuan, China's No.2 Bitcoin mining centre after Xinjiang, issued a ban on cryptocurrency mining a week ago. Bitcoin price in India stood at Rs. 25.3 lakhs as of 1:45pm IST on June 25.
China's State Council, or cabinet, vowed to crack down on Bitcoin trading and mining in late May, seeking to fend off financial risks after the global Bitcoin mania revived Chinese speculative trading in cryptocurrencies. The clampdown comes as China's central bank is testing its own digital currency.
Chinese authorities say cryptocurrencies disrupt economic order, and facilitate illegal asset transfers and money laundering. Analysts say Beijing is also worried about potential competition for the digital yuan and that the power-hungry business of bitcoin mining could damage the environment.
Following Beijing's call, China's main cryptocurrency mining hubs, including Inner Mongolia, Xinjiang, Yunnan, and Sichuan, have unveiled detailed measures to root out the business.
Bitcoin prices plunged below $30,000 (roughly Rs. 22 lakhs) this week, less than half their peak levels hit in April, as global investors worried about disruptions in a hitherto large market.
"If the government doesn't allow it (cryptocurrency mining), I just have to quit," said Liu Hongfei, a mining project operator in China's southwestern Yunnan province.
"You don't fight the Communist Party in China, do you?"
China's ban on Bitcoin mining may see up to 90 percent of all mining in the country go offline, according to an estimate by Adam James, a senior editor at OKEx Insights.
Bitcoin and other cryptocurrencies are created or "mined" by high-powered computers, or rigs, competing to solve complex mathematical puzzles in a process that makes intensive use of electricity.
Most miners in China are "shutting down their machines, and selling them," said Nishant Sharma, founder of BlocksBridge Consulting, a consultancy focused on the cryptomining industry.
As a result of China's shutdown, "every mining operation outside China benefits straight away," because their mining reward, which is proportional to their share of the global hash rate of the bitcoin network - a measure of miners' processing power - automatically goes up, Sharma said.
"This is the end of an era for cryptomining in China," said Winston Ma, NYU Law School adjunct professor.
