China is cracking down on the rise of the crypto industry. The government has labelled cryptocurrency mining an illegal industry. Since then, bitcoin mines have had to close their doors. This is reported by the NOS, which spoke to a so-called mining farmer.
Transactions with crypto coins take place through ‘mining’ or ‘mining’. In this process, computing power is made available in exchange for new coins. In September, the Chinese Central Bank banned transactions with bitcoin and other cryptocurrencies. Since then, mining has also been illegal.
According to China’s economic planning body, the National Development and Reform Commission, crypto mining is harmful to the environment. It causes a large amount of CO2 emissions and costs a lot of energy.
In addition, according to the Chinese Central Bank, the risks of the ‘hype’ in crypto transactions are high. The bank is developing its own digital currency called the e-renminbi. This cryptocurrency is not decentralized, nor is it anonymous.
Previously, local governments and energy companies tolerated the bitcoin mines (halls with computers and servers where transactions with bitcoin are validated), because they yielded extra money. Previous cleanup operations had little impact on most of the mines.
However, the consequences of the new law are immediately visible. Mines are being shut down in a hurry, which is visible on Chinese social media, according to the NOS. According to The Global Times, at least 80 to 90 per cent of China’s crypto mines were closed or moved abroad last month.
This is reflected in the hash rate, the measure of the total computing power of the bitcoin network. The University of Cambridge publishes a map with the hash rate on a monthly basis. At the beginning of this year, Chinese miners were responsible for nearly 80 per cent of the total hash rate. Since July, however, this figure stands at 0.00%.
Most miners are now moving abroad. Many large mining companies go to the United States, Kazakhstan and Russia. These countries have therefore taken over China’s position with regard to the hash rate, according to NOS.
China is not only pulling the reins in crypto trading. Last month, the country introduced a new law that will help regulate cyberspace in China. The Personal Information Protection Law imposes strict conditions on technology companies for collecting personal data.
Several tech companies closed their doors in China on this. Yahoo, among others, stopped offering its services in the Chinese market. Epic Games, the founder of Fortnite, also closed its servers in the country. In addition, Microsoft pulled the plug on LinkedIn in China.
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