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China starts to crack down on crypto mining operations

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A major Chinese bitcoin mining hub is shutting down its cryptocurrency operations

GUANGZHOU, China — China’s Inner Mongolia region plans to ban new cryptocurrency mining projects and shut down existing activity in a bid to cut down on energy-consumption.

 

Bitcoin is based on a decentralized network, which means it’s not issued by a single entity like a central bank. Transactions, recorded on a public ledger called the blockchain, need to be “verified” by miners.

 

These miners run purpose-built computers to solve complex mathematical puzzles that effectively allow a bitcoin transaction to happen. The miners receive bitcoin as a reward and that is the incentive. But because the computers are high-powered, they consume a lot of energy.

 

Bitcoin mining consumes an estimated 128.84 terrawatt-hour per year of energy — more than entire countries such as Ukraine and Argentina, according to the Cambridge Bitcoin Electricity Consumption Index, a project of the University of Cambridge. China accounts for around 65% of all bitcoin mining globally — Inner Mongolia alone accounts for about 8%, due to its cheap energy. In comparison, the United States accounts for 7.2% of global bitcoin mining. Not all cryptocurrencies work like bitcoin, however.

 

Inner Mongolia, located in northern China, failed to meet central government assessment targets regarding energy use in 2019 and was scolded by Beijing. In response, the region’s development and reform commission laid out plans to reduce energy consumption. Part of those plans involve shutting down existing cryptocurrency mining projects by April 2021 and not approving any new ones. They also involve reassessing other energy-intensive industries like steel and coal.

 

While the Chinese government has backed the development of bitcoin’s underlying blockchain technology, it has looked to crack down on digital currencies themselves. In 2017, Beijing banned initial coin offerings, a way to issue digital tokens and raise money. The government has also cracked down on businesses involved in cryptocurrency operations, such as exchanges.

 

China is also pushing to become more environmentally friendly. President Xi Jinping said last year that the country is targeting peak carbon dioxide emissions by 2030 and carbon neutrality by the year 2060.

source: https://www.cnbc.com/2021/03/02/china-bitcoin-mining-hub-to-shut-down-cryptocurrency-projects.html

 

As many people know, most crypto mining operations, especially Bitcoin, are located in China. But since crypto mining can consume a lot of electricity, one region from China decided to pull the plug on mining. As the article in the link above mentioned, Inner Mongolia plans to shut down existing miners and block new miners from operating.

 

This move by Inner Mongolia may then cause a ripple effect on nearby provinces as the country is trying to commit on its promise to reduce its carbon emission as part of its pledge to reduce global warming.

 

The effect of this news to the crypto world? Traders may start to panic if this is to be taken as negative news, and crypto prices may fall as a result. But if taken in a (slightly) positive light: in the case of Bitcoin, lesser miners will mean lesser supply to flood the market with, and Bitcoin miners outside Chinese jurisdiction can enjoy lesser competition. Prospective new crypto mining projects may want to seek better locations for their crypto mining operations.

 

Aside from my conjecture above, how are the crypto miners going to react to this?

 

And how about you? How do you think this news is going to affect you?

 

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On 3/4/2021 at 8:31 AM, kyoukage01 said:

Aside from my conjecture above, how are the crypto miners going to react to this?

I do not think this new will have the bigger impact in the cryptocommunity and cryptocurrency markets. You know, Bitcoin mining is itself highly competitive as the miners are struggling to find the new blocks. New mining farms are actively coming into the existence so there is no need to take much worries IMHO. 

On 3/4/2021 at 8:31 AM, kyoukage01 said:

And how about you? How do you think this news is going to affect you?

Nope, no effect at all as I am a long-term Bitcoin investor and enjoying to hold it😜

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On 3/4/2021 at 4:46 AM, kyoukage01 said:

This move by Inner Mongolia may then cause a ripple effect on nearby provinces as the country is trying to commit on its promise to reduce its carbon emission as part of its pledge to reduce global warming.

I think that we need to monitor the situation. I don't know exactly which provinces in China are doing most of the mining, but I have a feeling that China right now doesn't want to mess with Bitcoin alone. The new Silk road China was creating has been put to a halt since the pandemic, and it seems that China doesn't want to anger anyone right now. There is a lot in play but I don't think Bitcoin mining will just suddenly be banned and persecuted. It is one of the thousands of industries that had been thriving in China and had its impact, even a small one so far to the Chinese economy.

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Posted (edited)
On 3/5/2021 at 1:34 PM, Whited35 said:

I do not think this new will have the bigger impact in the cryptocommunity and cryptocurrency markets. You know, Bitcoin mining is itself highly competitive as the miners are struggling to find the new blocks. New mining farms are actively coming into the existence so there is no need to take much worries IMHO. 

An interview with a CEO of one of the affected mining pool companies said so too, regarding on the effects on the new restrictions by Inner Mongolia.

Quote

“This incident had little effect on us,” said Jiang Zhuoer, the CEO of BTC.TOP, one of China’s major mining pools, told Forkast.News. “We took into account the uncertainties in Inner Mongolia, so there are [now] only a few mining machines in Inner Mongolia and most of them are in the more stable mines in Xinjiang.”

source: https://forkast.news/inner-mongolia-shut-down-crypto-mining-china-bitcoin-miners/

 

But it looks like China as a whole is serious with the whole power consumption issue. Here is an excerpt from the same article above.

Quote

"However, this time the shutdown may be permanent. 

 

In the 2019 United Nations general assembly, President Xi Jinping pledged that China would halt the rise in its carbon emissions by 2030, and achieve carbon neutrality in 2060. Controlling energy consumption and gradually achieving carbon neutrality is an important goal that has been written into China’s 14th Five Year Plan draft, a crucial guiding document for the country’s future social development and economic growth. The plan is revised every five years, and the latest version is for 2021 to 2025."

source: https://forkast.news/inner-mongolia-shut-down-crypto-mining-china-bitcoin-miners/

 

The carbon emission is a big issue for them, as some of their cities can "boast" of being one of the most heavily air-polluted places on the planet. Cryptocurrencies especially Bitcoin, being such a guzzler when it comes to power consumption, are now being targeted in an effort to reduce power consumption and therefore pollution.

 

If current crypto mining companies can do something and be able to move out their operations to safer havens at the earliest possible time, then there won't be much effect on the crypto markets. That is, if majority of miners do not end up on places where the local government will also tell them to p*** off anytime soon.

 

Edited by kyoukage01
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1 hour ago, kyoukage01 said:

But it looks like China as a whole is serious with the whole power consumption issue. Here is an excerpt from the same article above.

So many countries in this world are actively working to minimize the carbon emission and all countries are not using hydropower as the main source of electricity. In this case, like you have said, so many mining farms have to search the alternative energy sources like Ukraine did for nuclear power. In my opinion, PoW based blockchain will lose the mainstream adoption trend due to the notorious energy consumption problem in future. Maybe, there will be discussions about the protocol upgrade even for Bitcoin no matter how challenging will it be 😜

 

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Yes you are right bro and i agree with your information and data about this idea and this idea is very useful and helpful for me and all other users who are working on it and earn a much and more profit from this online earning and learning platforum. Some countries are also want to damage but i think they will not be successful because this is a world wide programme which is used in all over the world and earn amuch and more profit from this site that you wnat from it.

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On 3/9/2021 at 9:15 PM, kryptonick said:

I think that we need to monitor the situation. I don't know exactly which provinces in China are doing most of the mining, but I have a feeling that China right now doesn't want to mess with Bitcoin alone. The new Silk road China was creating has been put to a halt since the pandemic, and it seems that China doesn't want to anger anyone right now. There is a lot in play but I don't think Bitcoin mining will just suddenly be banned and persecuted. It is one of the thousands of industries that had been thriving in China and had its impact, even a small one so far to the Chinese economy.

It looks like China is getting too strict on their reduced carbon emission policy. At least this is what I've been getting after reading a few more articles on this event. Industries in the country will have to strike a balance between performance and power consumption, and for Bitcoin miners to survive, they have to adapt to the situation as well and do something about the power consumption issue.

 

On 3/11/2021 at 1:38 PM, Whited35 said:

In my opinion, PoW based blockchain will lose the mainstream adoption trend due to the notorious energy consumption problem in future. Maybe, there will be discussions about the protocol upgrade even for Bitcoin no matter how challenging will it be 😜

Nakamoto-san envisioned that Bitcoin miners will switch exclusively to transactions at some point in the future once all the available BTC have been mined out. Maybe the time for miners to focus more on transactions is closer than we think. As of today, more than 18 million BTC has been mined out anyway; after three or four more halvings, profiting exclusively from mining alone may not be worth it due to even more computation difficulty compared to today. More computation difficulty will mean more power consumption (assuming that no new more powerful but energy-efficient hardware has been developed by that time).

 

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16 minutes ago, kyoukage01 said:

Bitcoin miners to survive, they have to adapt to the situation as well and do something about the power consumption issue.

Due to increasing population, demands of electricity is also increased globally. In this case, even alternative energy sources like solar power plants, nuclear power plants, etc. could be the best options but initial setup of the foundational components are extremely expensive. So miner alone can do nothing to fulfil the power consumption demands to run the mining equipment. 

20 minutes ago, kyoukage01 said:

Maybe the time for miners to focus more on transactions is closer than we think. As of today, more than 18 million BTC has been mined out anyway; after three or four more halvings, profiting exclusively from mining alone may not be worth it due to even more computation difficulty compared to today.

Scenario to increase transaction fee is on the way because PoW-based mining does not just consume the power but also time has to be spent to include transactions into the block that has only 1 MB size. Miners spent more time to find the new blocks and these notable demerits may inspire crypto community to think about the possible alternatives.  

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Posted (edited)

UPDATE: China has just intensified its crackdown on Bitcoin and other crypto miners, causing some crypto miners to halt their operations as a result.

 

Click on the link for more information.

https://www.reuters.com/world/china/crypto-miners-halt-china-business-after-beijings-crackdown-bitcoin-dives-2021-05-24/

 

As indicated in the news, the affected crypto mining companies mentioned that they will limit their operations in China. Whether or not there will be other countries in the meantime that will be willing to provide cheap energy to crypto miners AND are not hostile to cryptocurrencies itself remains to be seen. Should there be such a country, China will eventually lose its standing as a crypto mining center as the mining countries leave for new areas to continue their operations.

 

Edited by kyoukage01

 

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Posted (edited)

UPDATE: This news is not fully related to mining, but is rather part of the recent broader attempt of China to undermine cryptocurrencies in the country.

 

This time, China is blocking social media accounts that deals with cryptocurrencies to a certain extent.

https://www.reuters.com/world/china/china-blocks-several-cryptocurrency-related-social-media-accounts-amid-crackdown-2021-06-07/

 

The scary part on the article is what the professor featured in it has predicted. He said that the next logical move would be a law directly linking cryptocurrency mining and trading to criminal activities. Crypto miners may need to act sooner than expected before it is too late.

 

Edited by kyoukage01

 

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I think the same way as @Whited35 because only one btc miner can't just affect the whole bubble. Yes if there were more then enough miners then surely there rate could collapse but I don't think that it's gonna happen ever. 

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Posted (edited)
On 6/18/2021 at 7:45 PM, AMAN KHAN said:

I think the same way as @Whited35 because only one btc miner can't just affect the whole bubble. Yes if there were more then enough miners then surely there rate could collapse but I don't think that it's gonna happen ever. 

Just about every crypto miners located in China today are contemplating on moving their operations out of the country, because unlike the 'flash in the pan' operations before, Chinese authorities are dead serious on their crackdown this time.

 

It is no longer one or two miners' problem with China. The whole crypto mining industry in China is now in jeopardy. And let's not forget that a majority of crypto (majorly Bitcoin) miners are located there.

 

UPDATE: China has further stepped up in their crackdown of Bitcoin and other crypto miners, and with other bad news combined, this is the end result.

Spoiler

Bitcoin wipes out 2021 gains after sinking under $30,000

By Matthew Field
22 June 2021
 
Bitcoin has wiped out all its gains from the start of the year, falling below $30,000 (£21,557) for the first time since the beginning of January as a rout of the cryptocurrency gathered pace on Tue. The digital coin lost a tenth of its value in early trading, falling as low as $28,990 to a level last touched on December 30, before recovering to be just over $32,000. Trading volumes increased 15pc and speculators went on a selling spree, according to data from Coinmarketcap. 

 

Jitters spread across other digital currencies with falls across all coins of 6.5pc. Ethereum, the second-biggest digital coin, suffered a 5.7pc decline. Simon Peters, an analyst at eToro, said: “The primary reason for the sell-off has been the crackdown in China on mining operations and banking services.”

 

Chinese regulators and its central bank have launched a sweeping crackdown against digital coin companies.

Bitcoin mining companies, which use banks of computer processors to power the calculations that run the digital coin, have been banned in the country, forcing miners to abandon their operations. China accounted for the majority of the world’s Bitcoin mining last year. 

 

The People’s Bank of China has also ordered banks to stop trading, clearing and settlement of digital coin transactions, it said on Monday. Payment apps, such as Alipay, said they would step up monitoring for illegal cryptocurrency transactions. 

 

Bitcoin has lost more than half its value since a buying frenzy sent it above $60,000 in April. The spike followed support from cryptocurrency enthusiasts such as Elon Musk, who said Tesla would use the digital coin for payments. Companies such as Uber, PayPal and Visa also said they would support cryptocurrency.

However, Mr Musk said last month that Tesla would no longer accept Bitcoin over environmental concerns about its power use and carbon footprint.

 

UK banks have also hardened their stance on cryptocurrency. TSB is planning to ban crypto purchases from sites with high rates of fraud, while Starling Bank has banned all payments to cryptocurrency exchanges.

Shares linked to digital coin prices have also suffered this week. Coinbase, the US cryptocurrency app, fell 3pc on Nasdaq on Tuesday and its shares have slumped by a third since it listed in April. 

 

Shares in London-listed Bitcoin mining company Argo Blockchain fell 2.2pc.

https://www.telegraph.co.uk/technology/2021/06/22/bitcoin-wipes-2021-gains-sinking-30000/

 

But why the 'persecution'? It can be said that it all boils down to one word - CONTROL.

As I quote:

Quote

"The Chinese Communist Party has made it known for the last several years, couple decades, that rising up to be the geopolitical superpower in the world, replacing the United States or at least being on par with the United States is their stated goal," Bhatia said.

 

"And so when you look at the wave of adoption of bitcoin and its position as a macroasset, I do believe that China wants to be a part of that ... What I've seen from articles that have come out in Chinese newspapers, for example, is that they identify bitcoin as a potential digital gold and a solid investment opportunity looking forward into the future. We have on one side, China might be embracing Bitcoin as an investment and then the other side, they want to crack down on mining, they want to make sure that illegal trading is taken out of the marketplace and that the government has control over it. So, it's really a tale of two worlds."

 

source: https://ph.news.yahoo.com/bitcoin-wipes-out-2021-gains-as-china-crackdown-continues-142206939.html

 

Edited by kyoukage01

 

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This is not possible that the china make start the rack down on crypto mining becasue in the market now at this time china make the coins so much through just mining and they earn good money through this and its true.


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