{"id":12569,"date":"2019-04-09T19:35:51","date_gmt":"2019-04-09T19:35:51","guid":{"rendered":"https:\/\/davidgerard.co.uk\/blockchain\/?p=12569"},"modified":"2019-04-09T20:49:13","modified_gmt":"2019-04-09T20:49:13","slug":"china-is-kicking-out-bitcoin-mining-what-happens-next","status":"publish","type":"post","link":"https:\/\/davidgerard.co.uk\/blockchain\/2019\/04\/09\/china-is-kicking-out-bitcoin-mining-what-happens-next\/","title":{"rendered":"China is kicking out Bitcoin mining \u2014 what happens next"},"content":{"rendered":"

China’s National Development and Reform Commission (NDRC) released guidance<\/a> (PDF<\/a> in Chinese) on Monday that includes shutting down Bitcoin mining \u2014 and even the manufacture of mining hardware. From the South China Morning Post:<\/a><\/p>\n

Industries in the eliminated category include those seen as wasting energy or polluting the environment, according to rules enacted by China\u2019s cabinet<\/span><\/a>\u00a0in 2005. Investment and loans in those industries are banned. During the elimination period, authorities are allowed to raise electricity prices for relevant businesses to force them to close. The manufacturing, sale, and use of products in the eliminated categories are also prohibited.<\/p><\/blockquote>\n

Bitcoin mining is one of the sectors to be eliminated immediately.<\/p>\n

This isn’t new \u2014 China started pushing the miners out over a year ago.<\/a><\/p>\n

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Why China hates Bitcoin<\/h3>\n

China has been slowly pushing Bitcoin out for a while now, particularly since the People’s Bank of China (PBOC) shut down the exchanges<\/a> \u2014 they were worried that foolish crypto speculators might somehow mess up badly enough to affect the real economy.<\/p>\n

Bitcoin mining moved to China because it had some of the cheapest commercial electricity in the world \u2014 2.9 to 4.3 cents per kilowatt-hour.<\/a> But quite a lot of Bitcoin mining in China ran off stranded surplus generation capacity,<\/a> both hydroelectric and coal \u2014 power plants that weren’t well-connected to the national grid, or were in already-oversupplied areas, so the electricity wasn’t useful for anything else.<\/p>\n

The national grid is much better connected now,<\/a> and they don’t have so much stranded capacity. So the PBOC started pushing miners out in January last year.<\/a><\/p>\n

Some are already saying the Bitcoin shutdown is meant to stop capital flight in the form of bitcoins \u2014 where you buy electricity for mining in yuan, then sell the bitcoins for dollars. But this seems to have been negligible \u2014 the Council on Foreign Relations says that<\/a> \u201cBitcoin may have been a proxy for downward pressure on the yuan, but bitcoin outflows only ever made up a very very small amount of Chinese capital outflows.\u201d Local analysts were also sceptical<\/a> that this was ever much of a thing.<\/p>\n

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Buy one orange get one old miner free lol #BTC<\/a> pic.twitter.com\/NUDmMN4MAz<\/a><\/p>\n

— Mia Tam (@blockandchain) November 26, 2018<\/a><\/p><\/blockquote>\n