China plans to ban Bitcoin mining, report claims

Image: VCG / Contributor / Getty IMages

China plans to put an end to cryptocurrency mining in the country, Reuters reported Tuesday citing a “draft list of industrial activities” China’s state planning agency looks to put a stop on. 

The decision doesn’t appear to be final — the National Development and Reform Commission (NDRC) is seeking public opinions on a revised list of industries that will either be encouraged, restricted or eliminated. Bitcoin now falls in that last category. 

According to Reuters, the NDRC didn’t give a date or any details on how, exactly, Bitcoin mining should be eliminated — but that would mean that Bitcoin mining is to cease immediately. 

Final date for public comments is May 7. CoinDesk points out, however, that the document is only a guide for future development, which may not have a real impact on Bitcoin mining in the country. 

Bitcoin mining, which is the process of creating new Bitcoin by employing computational power to solve an increasingly hard math puzzle and power Bitcoin’s payment network at the same time, is primarily done in China. A report dating October 2018 said 74% of Bitcoin mining power resided in China, primarily because of cheap electricity and access to specialized mining hardware. A total, immediate ban, would be horrible news for the miners, but it might also destabilize Bitcoin.

Cornell professor and cryptocurrency expert Emin Gün Sirer chimed in on Twitter. His take is that, while the ban is significant, it doesn’t mean the end of Bitcoin, though it could affect coin production costs. 

If China really goes through with the ban, it might have one positive consequence: decentralization. The fact that Bitcoin mining power has been concentrated in China meant that a couple of huge mining pools (operations in which miners join forces to produce new Bitcoins together) could destabilize or even take over the entire network. But if Bitcoin mining power spreads a bit more evenly around the globe, this threat would be diminished. 

Over the past couple of years, China has been quite hostile towards Bitcoin and cryptocurrencies in general, at one point shutting down all cryptocurrency exchanges in the country, and undertaking or threatening numerous other measures to stifle cryptocurrency-related activities. 

Bitcoin’s price has been on the rise, recently surpassing $5,000 for the first time in 2019. Interestingly, the first time Bitcoin’s price rose over that mark was in October 2017, and that was despite the negative news from China which abounded at that time. 

Disclosure: The author of this text owns, or has recently owned, a number of cryptocurrencies, including BTC and ETH.