China is moving towards discouraging cryptocurrency mining in the region. In an all-new draft proposal, the latest industry under the scanner is cryptocurrency mining. According to the proposal by the National Development and Reform Commission [NDRC], crypto-mining is flagged as an “undesirable industry”. The proposal urged the State to get rid of the “wasteful” sector.
According to the proposal’s directive, the sector poses legal and safety complications, while also polluting the environment with extensive power consumption.
Due to its low-cost electricity, China has been the hotspot for 70 percent of all crypto mining-related activities. It is also home to the largest chipmaker, Bitmain.
Following the development, Mati Greenspan, a Senior Market Analyst at eToro, commented,
“If this ban does end up happening its more likely to push BTC prices up than down. The loss of cheap Chinese electricity would raise the mining cost, which is net positive on price. It would also serve to kill the FUD that Bitcoin mining is centralized.”
Bitcoin mining has been strongly criticized by individuals outside the community, while strong proponents of the digital coin insisted that the mining process was not necessarily polluting. The latest reports from Digiconomist suggest that Bitcoin’s network uses an enormous amount of renewable energy from the Chinese province of Sichuan, to which Bitcoin advocates argue that the energy reserves anyway dry up, if not utilized.
This development will be a fresh blow to the cryptospace at a time when Bitmain is struggling from the losses it posted in 2018.
Recently, it was reported that traders and investors in the region had started to acquire Bitcoin at a cost of 3% premium via over-the-counter or OTC platforms. China had imposed a blanket ban on cryptocurrency trading and ICOs last year, however, possession of virtual assets was not prohibited. The Asian country has stringent laws for cryptocurrencies in place. However, it is open to the underlying blockchain technology, which has been leveraged by big players like Baidu and Alibaba, among others.
The proposal does not outline a deadline. However, the public will be allowed to comment on the draft up to May 7.
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