China intervenes to close the bitcoin mines!

 The Asian giant wants to eliminate the bitcoin mining industry in the  country due to concerns about excessive electricity consumption and  financial risk.

China will take steps to eradicate the country's bitcoin mining  industry from concerns about excessive electricity consumption and  financial risk, reflecting the authorities' view that cryptocurrencies  are not a strategic industry.

A  working team with representatives of various agencies has instructed  the provincial governments to "actively push" the companies of their  respective regions to abandon the cryptocurrency mining industry, as  reflected in a document to which they have had access Financial Times. The decision to put pressure on mining companies follows the closure  of local bitcoin exchanges and the prohibition of initial currency  offers.

Miners  create new bitcoins by solving complex mathematical problems whose  solutions are used to validate new bitcoin transactions. Although it is apparently a computer task, the dependence on  processing capacity makes the process more similar to industrial  manufacturing than traditional high-tech businesses.

Many bitcoin miners have established operations in remote areas without even registering a company. Some have even shied away from Chinese regulations that prohibit end  users from buying electricity directly from power producers, and not  from power grid operators.

China  mines about three-quarters of the world's bitcoin, according to Liao  Xiang, CEO of Lightningasic, a Shenzhen mining operation. Chinese miners have taken advantage of cheap electricity from regions  rich in coal or hydroelectric power, such as Xinjiang, Inner Mongolia,  Sichuan and Yunnan.

Digiconomist, an Internet portal that tracks the evolution of the  industry, explains that it accounts for 0.17% of global electricity  consumption, more than 161 countries.

The  Chinese Government allocates investments and applies various industrial  policies in order to take the lead in strategic sectors such as  artificial intelligence and robotics. But the action against bitcoin reflects that it does not consider that cryptocurrencies deserve state support.

The  bitcoin mining "consumes a large amount of electricity and also  encourages an atmosphere of speculation with 'virtual currency',"  according to the document. Mining operations contradict efforts to prevent financial risk and  discourage activities that "deviate from the needs of the real economy,"  he added.

The working group on Internet finance, of which the People's Bank of  China is a part, has already led in the past to regulatory adjustments  on loans between individuals and online consumer loans.

The order does not ask the regional authorities to close the mining  operations directly, but force their disappearance through the strict  application of policies on electricity consumption, land use, tax  collection and environmental regulation.

Chinese  miners are now looking for ways to move their operations abroad, either  by moving factories or selling their experience. Cheap electricity and cold weather, which helps prevent overheating of computers, are the main requirements. Canada, Iceland, Eastern Europe and Russia are considered the most promising destinations.

Industry  players argue that, in any case, China was never a particularly  suitable location for mining, even taking into account the costs of  electricity in the chosen regions, which are lower than the national  average. China's current dominance is mainly due to the good quality of the supply chains of the components used in the mining process.

"The  difficulty is that settling in other countries requires time and  capital to build large-scale data centers," Liao explained. "It consumes a lot of electricity, and the typical industrial park does not meet the requirements." 

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