Two of China’s biggest cryptocurrency mining regions order mining operations to cease operations, even as China aims for blockchain leadership
Regional authorities in China have begun cracking down on Bitcoin and cryptocurrency mining projects, as part of a nationwide ban.
The moves come after China last week announced a drive to build up its industry around the blockchain, a technology that underpins cryptocurrencies but has applications in a wide range of other fields, from finance to supply chain management.
Authorities in Qinghai, in China’s northwest, and the neighbouring Xinjiang area ordered mining projects to close, Reuters reported.
Xinjiang is China’s biggest cryptomining region, accounting for about one-third of operations in the country, with Qinghai in ninth place, according to figures from the University of Cambridge.
China accounts for more than half of all bitcoin production worldwide, but the country’s State Council last month vowed to clamp down on bitcoin mining and trading as part of a long-running policy.
The move was one factor behind a Bitcoin sell-off last month that briefly wiped $1 trillion (£710bn) off the value of all cryptocurrencies.
The Qinghai office of China’s Ministry of Industry and Information Technology (MIIT) ordered a ban on new cryptomining projects in the province, and told existing ones to shut down, according to a notice that was confirmed by local officials.
Cryptomining projects that pretended to be big data or supercomputing centres would be punished. Companies are also barred from providing sites or power for cryptocurrency mining, a highly power-intensive process for producing virtual coins.
The Development and Reform Commission of Xinjiang’s Changji Hui Prefecture also reportedly sent out a similar notice, while cryptomining projects in Xinjiang’s Zhundong Economic-Technological Development Park were ordered to close.
Inner Mongolia, China’s third-biggest cryptomining region, has published draft rules aimed at shutting down mining operations, while second-place Sichuan has announced a probe.
China is in line with most governments in its suspicions of cryptocurrencies, which regulators and central banks have described as a threat to financial stability.
But last week it said it would boost blockchain plans by establishing an “advanced blockchain industrial system” including industrial standards, tax incentives and intellectual property protections for the blockchain industry.
China wants to become a world blockchain leader by 2025, according to a report from the MIIT and Cyberspace Administration of China.