China to Regulate Bitcoin Mining by Restricting Electricity
According to news sources in the region, Chinese authorities are looking to discourage cryptocurrency mining by gradually starving mining operations of electric power. During a closed-doors meeting of the Leading Group of Beijing Internet Financial Risks Remediation an official from the central bank outlined ways government could further discourage crypto-activity in the People’s Republic.
Though mining is currently still legal within China, the government has become increasingly hostile to cryptocurrencies, banning all ICOs and crypto-exchanges in September. Authorities are now turning their attention to mining, although no one is yet suggesting an outright ban.
Miners’ Energy Consumption
Bitcoin-mining requires large energy resources, which has meant that it is most economical in areas with cheap electricity, such as Siberia and areas in China with hydroelectric power. The provinces of Sichuan and Yunnan have seen large inflows of Bitcoin miners, disrupting energy consumption patterns and concerning authorities.
The People’s Bank of China suggested that local governments might monitor the use of electricity to identify potential cryptocurrency mines. Once mines have been found their access to power could be regulated. This way the amount of mining could be reduced, without the need for a ban.
Though the People’s Bank of China does not control power directly, it can instruct local government to restrict access to power to reduce production. Other regulators will also be involved in the process, including the National Development and Reform Commission, the body ultimately in charge of Chinese power.
A Reversal in the Chinese Position?
However, some believe that the current Chinese discomfort with cryptocurrencies could change completely. Bobby Lee, BTCC CEO and brother of Litecoin founder Charlie Lee, this week told CNBC’s “Squawk Box” program that he expected China to eventually reverse the ICO and exchange ban and move to a tax-and-regulate model instead. Unfortunately he could not provide an estimate of when any such change might take place.