Earlier reports from 2019 suggested that cryptocurrency mining in China would be banned. A recent announcement, however, confirms that will not be the case: miners can continue their operations as before.
Image courtesy of Shutterstock
Full story
In April, China’s National Development and Reform Commission (NDRC) published a draft document proposing a list of industries to restrict or phase out. Cryptocurrency mining appeared on that draft list.
The draft covered more than 450 industries the NDRC considered difficult to regulate, unsafe, or wasteful of resources. Mining was placed in the category of activities suggested for elimination.
The final document has now been released. Titled the Catalogue for Guiding Industrial Structure Adjustment, it does not list crypto mining among the industries to be removed. The regulation will take effect in early 2020 and appears to set the definitive policy direction.
It is unclear whether public feedback influenced the change or whether the government revised its stance on blockchain and digital assets.
What does cryptocurrency mining in China represent?
China is currently the dominant force in global cryptocurrency mining. Major manufacturers and operators include Bitmain, Canaan Creative, and Ebang. Chinese mining pools account for roughly 70% of Bitcoin’s hash rate, according to industry estimates.
The scale of mining operations is reflected in recent reports such as a large mining farm fire in China that damaged equipment worth an estimated $10 million.
While cryptocurrency exchanges and initial coin offerings have been banned in China, authorities have generally allowed mining to continue. Local reports indicate some mining firms have negotiated agreements with power plants and local utilities to meet their energy requirements.
This recent update is positive news for Chinese miners: they can continue to operate without the immediate threat of a nationwide mining ban. The profitability of Bitcoin mining has also improved recently due to rising coin prices.
The decision may also signal a broader shift in sentiment toward cryptocurrencies and blockchain technology. Recent remarks by President Xi Jinping have fueled hopes that China could adopt a more open stance toward digital currencies in the future.
For now, cryptocurrency mining in China will carry on as it has in the past.