The nation’s internet finance regulator is asking local governments to strongly encourage firms to quit the business by jacking up power prices and and issuing stronger environmental rules.

After banning initial coin offerings and calling on local exchanges to halt virtual currency trading past year, Chinese authorities outlined proposals this week to discourage bitcoin mining – the computing process that makes transactions with the cryptocurrency possible.

Until now, Chinese miners have capitalized on cheap, coal-fired electricity in regions such as Xinjiang and Inner Mongolia.

“Currently, there are some so-called “mining” enterprises that produce ‘virtual currencies.’ They have consumed huge amounts of resources and stoked speculation of ‘virtual currencies.'”

The document calls for monthly reports on remaining bitcoin-mining operations in each region.

The news is likely to trigger an immediate dip in bitcoin mining, which could create a shortage that would have a knock-on effect on prices, potentially leading to yet another price spike.

The notice was issued to local branches of the internet finance regulator and orders local governments to guide mining companies to shut down their operations.

Some recent reports have indicated China would not close Bitcoin mining operations but only wanted to curtail power usage and mitigate speculation and movement of money, but as with most policy shifts in China, nothing is totally clear until the government actually takes action. China, which exerts notoriously strong control over the internet and private businesses, has already moved to ban initial coin offerings and crytpocurrency exchanges.

Bitmain, which runs China’s two largest bitcoin-mining collectives, is setting up regional headquarters in Singapore and now has mining operations in the US and Canada, Wu Jihan, the company’s co-founder, said in an interview.

On Monday, the Chinese cloud cryptocurrency mining pool ViaBTC announced the shutdown of its mining business. He also considered locations in Iran and Russian Federation.


Read more