Several sources including the Wall Street Journal have reported that the Chinese government and its regulators may target bitcoin mining operators in the region following the imposition of a nationwide ban on cryptocurrency and bitcoin exchanges.
Experts in the cryptocurrency sector and mining industry including John McAfee strongly believe that the Chinese government will not order a crackdown on bitcoin mining centers and operators. As CCN.com previously reported, McAfee revealed that Jihan Wu, the co-founder of Bitmain, the world’s largest bitcoin mining equipment manufacturer that is reportedly valued at billions of dollars, told McAfee in a meeting with Roger Ver that the Chinese government is not planning a ban on mining centers.
But, in a statement, ViaBTC CEO Haipo Yang explained that if the Chinese government decides to ban bitcoin mining centers and operators, it will be the end of the Chinese bitcoin mining industry. Yang wrote:
“Technically, China can’t ban bitcoin traffic, we have our own sync network. But if the Chinese government says mining is illegal, we are fucked.”
As Yang noted, it is possible for the Chinese government to target bitcoin mining operators in many methods. For instance, the Chinese government could decide to nationalize bitcoin mining centers and announce them as the property of the Chinese government.
For the Chinese mining industry, the crackdown on bitcoin mining by the government will lead to financial turmoil. More specifically, companies like Bitmain that recently secured multi-million dollar funding rounds will not be able to serve their biggest markets, which are domestic miners and mining centers.
Earlier today, through its a PBoC-owned financial news publication, PBoC researcher and Central University of Finance and Economics professor Huang Zhen explained that the central bank of China perceives bitcoin as a threat. More importantly, Zhen emphasized that the government plans to release a government-issued national digital currency in the future, as a rival currency to bitcoin.
If the intention of the government is to eliminate bitcoin in the Chinese market in order to promote and issue its own digital currency, the Chinese government will likely ban aspect of bitcoin. But, in contrary, if the Chinese government is not ready to release a digital currency of its own, it will re-instate bitcoin trading platforms and prevent from issuing any further restrictions and regulations on bitcoin miners.
“The central bank has set up a research group and a digital money research institute to explore the digitization of sovereign money. After this round of virtual money markets supervision, we expect under the auspices of the Chinese central bank to launch our own sovereign digital currency as soon as possible to help maintain China’s leadership in the development of global digital finance,” Zhen wrote.
Ultimately, even if the Chinese government does ban bitcoin mining centers and operations in China, in the mid-term, it will not pose a major threat to the global bitcoin mining industry primarily due to the emergence of multi-billion dollar Japanese conglomerates that are developing their own ASIC miners and manufacturing independent bitcoin mining equipment to mine the digital currency.
The entrance of Japanese conglomerates into the global bitcoin mining industry will further stabilize the market and more evenly distribute bitcoin’s global hash rate.
Featured image from Shutterstock.
Last modified: May 21, 2020 9:14 AM UTC