China’s State Planner Wants To Ban Crypto Mining

News, Regulation | April 11, 2019 By:

The National Development and Reform Commission (NDRC), a macroeconomic management agency under the Chinese State Council, wants to eliminate crypto mining in the country.

On Monday, NDRC, which has broad administrative and planning control over the Chinese economy, unveiled amendments to its guidance for adjustments to the nation’s industrial structure, including categories that are encouraged, restricted and eliminated. The guidance added cryptocurrency mining to more than 450 activities the NDRC said should be eliminated as they did not adhere to relevant laws and regulations, were unsafe, wasted resources or polluted the environment. The new list is under public consultation until May 7.

In September 2017, the People’s Bank of China closed local cryptocurrency exchanges and banned initial coin offerings (ICO) in order to maintain financial stability. In January 2018, the central bank asked local governments to regulate the power usage of crypto miners to gradually reduce the scale of their production. At the time, the central bank said that it doesn’t plan to shut down mining farms, but to impose limitations on power usage.

China is home to many of the world’s largest cryptocurrency mining farms, including Antpool, Bixin, BTCC, and F2pool, thanks to cheap electricity in the country’s coal-rich Xinjiang and Inner Mongolia regions. These mining farms control more than 80 percent of the bitcoin network’s collective hashrate.

Jehan Chu, managing partner at blockchain investment firm Kenetic, said that the NDRC’s move is in line overall with China’s desire to control different layers of the rapidly growing crypto industry, and does not yet signal a major shift in policy.

“I believe China simply wants to ‘reboot’ the crypto industry into one that they have oversight on, the same approach they took with the Internet,” said Chu.

Michael Zhong, an analyst with Beijing-based cryptocurrency research firm TokenInsight, said that if the new rules are enacted, Chinese miners will have to give up their bases in Yunnan and Sichuan and move operations to foreign countries.

“Bitcoin mining will no longer be dominated by China but become more decentralised,” Zhong said.