Bitcoin is down after China signals it wants to ban bitcoin mining
- Bitcoin slid 2% after China's state planner added bitcoin mining to a draft list of activities it wants to ban, according to Reuters.
- The decision comes as the Chinese government continues to crack down on cryptocurrency trading exchanges, cryptomining, and new cryptocurrencies.
- China is the world's largest market for bitcoin-mining equipment and home to major manufacturers such as Bitmain and Canaan.
- Bitcoin has surged by more than 25% since the start of April, passing the $5,000 mark for the first time since mid-November.
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The price of bitcoin slid 2% after China's state planner put bitcoin mining on its chopping block. The National Development and Reform Commission (NDRC) added the budding industry to a draft list of industrial activities it wants to ban, according to Reuters, signaling the Chinese government's growing dissatisfaction with cryptocurrency.
The NDRC is seeking comment from the Chinese public on a revised list of industries that it plans to promote, restrict, or eliminate. It added bitcoin mining - harnessing computer-processing power to solve complex mathematical problems in order to verify cryptocurrency transactions, in exchange for new bitcoins - to a list of more than 450 activities that it considers to be unsafe, a waste of resources, or damaging to the environment. However, it didn't provide a timeline for phasing out the industry.
The global bitcoin industry uses an estimated 42 terawatt hours of electricity a year - close to the amount consumed annually by the entire nation of Bangladesh. China is the world's largest market for bitcoin-mining equipment and home to major manufacturers such as Bitmain and Canaan.
Its bitcoin industry has faced growing pressure since 2017, according to Reuters, when regulators began shuttering cryptocurrency trading exchanges, restricting mining, and banning "initial coin offerings" where new cryptocurrencies are debuted.
At $5,204, the price of bitcoin has surged by more than 25% since the start of April, passing the $5,000 mark for the first time since mid-November without a clear catalyst. A Chinese crackdown on mining could reduce the supply of new bitcoin, driving prices higher. However, it could also fan fears of regulatory intervention and temper hopes of sector growth, dampening demand.
Many Bitcoin advocates see a need for greater transparency, environmental accountability, and a crackdown on fraud in the wild west of cryptocurrency markets. Skeptics will counter that the Chinese government is attacking bitcoin mining because it's wary of any industry that it doesn't control. The Chinese public may have a dilemma on its hands.