With cryptocurrencies virtually in China’s limbo, it would appear that a major local authority is now turning against the mining space. Earlier today, news sources revealed that the financial regulator of the Sichuan province in China had issued a possible ban on cryptocurrency mining in the region.
No More Support for Hydroelectric Power
As a tweet from Asian FinTech news site PA News confirmed, the notice came from Sichuan’s financial administrative authority. The body has now asked its subordinate agencies to “guide” companies in the mining space to begin shutting their operations down.
The ban will begin with the region’s abundant hydroelectric power, which has been a considerable benefit to the crypto mining space. According to reports, the authority has ordered hydroelectric plants to stop investment into all existing crypto projects immediately. At the same time, they should immediately cease adding new mining projects.
The news adds that any hydroelectric power plant that doesn’t comply will face an investigation for illegal construction projects. Other consequences include bans, fines, self-demolition, and other administrative measures.
It’s unclear whether the project will be restricted to hydroelectric plants or will extend to mining plants in the region. However, since mining is heavily dependent on hydroelectric power in the Sichuan region, this new development presents quite a significant problem.
China’s Possible Withdrawal from Cryptocurrency Mining Altogether
The Sichuan province has always been a hotspot for mining in China. Last month, the Cambridge University’s Centre for Alternative Finance (CCAF) launched a Bitcoin Mining Map, which tracks the average monthly hash rate produced by every country across the world.
The map’s information comes primarily from three of the largest mining pools – ViaBTC, Poolin, and BTC.com. As the map shows, China accounts for 65.08 percent of global hashpower. Going even deeper, it shows that the Sichuan province accounts for 9.66 of China’s hashpower.
Mathematically, this means that 6 percent of the global hashpower originates from Sichuan alone. The only region in the country that does better is the Xinjiang region – also in China – which represents 37 percent of the global hashpower.
Apart from the fact that it will deplete a significant amount of hashpower, this move is also a scary harbinger for what is to come – a possible outlawing of cryptocurrency mining in China. As stated earlier, China accounts for 65 percent of the global hashpower. If the government decides to outlaw mining in the country, it could signal a problem for crypto mining across the world. Beijing already banned cryptocurrencies and every related business in the country. Mining could be next to fall.
Of course, the government doesn’t entirely have much to lose – save for the tax revenues that mining companies will otherwise be paying. The proposed state-backed asset doesn’t need any mining, so the government doesn’t need any of the infrastructures. If Beijing is looking to scrap mining entirely, a complete mining ban isn’t off the table.