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China is yet again trying to curb the rapid growth of cryptocurrencies, this time in the form of a proposed ban on mining farms.
These facilities full of servers validate transactions in bitcoin, ethereum, and other digital currency markets and suck up large amounts of energy doing so. As such, they are usually located in places where electricity is cheap, including northern countries such as Canada, Iceland, and Scandinavia, but predominantly in Asia-Pacific.
China’s proposal came in the form of an official notice, which was published in Chinese and reported on by the South China Morning Post. Issued by The National Development and Reform Commission (NDRC), it outlines hundreds of activities that should be eliminated because they either waste energy or pollute the environment.
It’s unclear whether the ban will go through and, if it does, what impact it will have. The public has until May 7 to comment on the proposal. But the NDRC’s list also includes sectors that it had suggested be eliminated over a decade ago, raising questions about the agency’s enforcement powers.
The larger takeaway is that this news comes as Bitcoin reaches $5,200 in value, its highest level this year, and is just the latest in a string of efforts by the Chinese government to curb the industry. In January 2018, a Chinese regulator proposed that mining farms be shut down. Months prior to that, China banned crypto exchanges serving local customers.
The state-owned Securities Times said on Tuesday that the notice “distinctly reflects the attitude of the country’s industrial policy” towards the cryptocurrency industry.
It could also have an effect on the larger crypto economy beyond mining farms themselves and the role of large players such as Beijing-based Bitmain Technologies. If a ban goes through, “Bitcoin mining will no longer be dominated by China but become more decentralised,” Michael Zhong of cryptocurrency research firm TokenInsight, told the Post.
Ambreen Ali is a freelance writer and editor based in the New York City area who specializes in business and technology. She has 15 years of reporting experience, including covering Capitol Hill and reporting from South Asia.