You’ve more than likely seen headlines and various mutterings around China’s war against cryptocurrency trading and mining within the country, but what’s exactly happening?
Recently an official document was released by the Chinese State Council, stating that “We should crack down on bitcoin mining and trading activities and prevent individual risks from being passed to the whole society.”
Although the reasoning behind this may not be clear, it was cited as being due to “environmental concerns.” While this is indeed a concern, especially regarding the trading of currencies such as Bitcoin, many have found this justification dubious.
Regardless of the validity of this reasoning, immediate shockwaves have been felt in digital currency markets both domestically and abroad. Most notably, Bitcoin took a sudden tumble in value to under around $30,000 following the official statement’s release.
However, Bitcoin wasn’t alone, with just about all major cryptocurrencies seeing similar drops in value — Ethereum, XRP, and Ripple to name a few.
While no definitive plans have been made, nor any direct actions taken by the government itself, crypto miners within China are now desperately scrambling to move their mining operations further afield, with the US being a prime location.
“I have been having conversations all weekend, starting since last Friday, with Chinese miners looking to co-locate in the U.S.,” stated Ethan Vera, COO of Seattle-based mining firm, Luxor.
The intercontinental migration of mining ventures will not only be costly but may take up to months, leading to a significant break in operations.
Despite the projected goal of Chinese mining groups continuing operation as normal later down the line, there still remains a great deal of uncertainty due to the alleged crackdown potentially being shelved. This has further soured expectations, and has thrown the importance of these migrations into question, leaving many in a state of limbo.
“Miners in China I’ve spoken with are unsure of the impact right now.” tweeted Thomas Heller, co-founder, and CBO at Compass Mining.
The upcoming weeks will be critical in getting a handle on which steps the Chinese government intends to take on the issue, whether it be restrictive regulations, or an outright ban as many are expecting to be the case.
We’ll be sure to keep you posted on any developments as they emerge.