Bitcoin mining in China is no longer in the line of fire.
Bitcoin Mining Is A-OK
Following several years of going back and forth on the subject, regulators within China’s borders have finally decided that bitcoin mining should be allowed to continue without interference from the government. The country had long considered banning the process of extracting new bitcoins as a means of protecting the environment, though now it appears those fears have subsided.
The bulls are seeing this as a huge win for cryptocurrency, though at press time, the announcement doesn’t seem to have had any serious affect on the market. Bitcoin, for example, is trading for $9,200, which is about $100 less than where it stood just yesterday.
China has had a very mixed relationship with cryptocurrency. The country banned initial coin offerings (ICOs) and foreign crypto exchanges in 2017 and 2018 respectively, though it has recently unveiled plans to release a state-backed digital version of the yuan.
However, these plans don’t necessarily mean that the country is suddenly pro-crypto. If anything, a digital yuan would allow China to potentially spy on all users and better understand the money habits of all who spend it. Thus, the coin is designed more for surveillance and less in the name of blockchain and crypto innovation.
The country has also stated that the digital coin is a way for China to compete with Libra, Facebook’s new cryptocurrency which is set for a 2020 debut.
Even the acceptance of bitcoin mining as a potential business practice is likely a two-sided coin (pardon the pun). China is presently home to two of the largest cryptocurrency mining companies in the world – Bitmain and Canaan Creative. Each company pulls in billions in revenue each year, and no doubt China is getting a taste of that whenever these corporations file their taxes.
Banning bitcoin and crypto mining would mean that these companies would have to either shut down completely or pack up their bags and move out of the country. Each maneuver would likely result in China missing out on some heavy tax income each year.
At the same time, one could argue that China is indeed changing its attitude regarding crypto-related technology. Recently, president Xi Jinping commented that blockchain has the power to reinvigorate the Chinese economy, and that he’s looking to push blockchain innovation within the nation’s borders over the coming months.
Happy Times Ahead
Several analysts are expressing pleasure regarding China’s sudden shift. Mati Greenspan, a senior analyst with e-Toro, commented:
The announcement from Xi Jinping that China should ‘seize the opportunity’ of blockchain was a watershed moment for the industry. It has put the issue of payments at the forefront of the global trade war and has served as a huge endorsement for the entire crypto industry.