The Chinese government in Sichuan Province has announced plans to end Bitcoin (BTC) mining activities Rising cryptocurrency prices have exacerbated illegal activity under the guise of mining.
Sichuan: 10% of the global hash rate
According to Cambridge University estimates Sichuan is responsible for almost 10% of the global hashrate. In fact, this single Chinese province is mining more bitcoins than the entire United States or Russia.
China: Bitcoin mining map. Source: Cambridge University.
Apparently, Sichuan tried to attract miners to combat the economic downturn and jobs created by the COVID-19 pandemic. Instead, “illegal fundraising” and multi-level marketing are said to have flourished.
It is unclear whether these recent problems will end mining in Sichuan. China’s crypto community has flourished despite government restrictions. Christopher Bendiksen, research director at CoinShares, told Cointelegraph:
“”I don’t think bitcoin miners in China have felt comfortable in quotes. If you mean that you feel secure about your property right. And, you know, the idea that one day the government just won’t show up and take everything. I really doubt they have ever felt comfortable with it. Now it’s probably worse than ever. “
But what would happen if the authorities took their guidelines seriously this time and tried hard to eradicate all Bitcoin mining in Sichuan? Who would take over the post?
To the west?
Philip Salter, chief operating officer of Genesis Mining, the company that emphasizes that it will not be mined in China, told Cointelegraph:
“What happens to China is that China has cheap production costsCapEx is very low. In China everything is cheap and fast. But operating costs <...> They are not that low because most of the country runs on coal and coal is the most expensive source of energy. In order to, In fact, operating costs in China are not that good“”
Probably the most profitable and stable miners could move their equipment to other Chinese provinces. It could also set fire to the latest pro-western trend in the industry. Even the Chinese giant Bitmain ran a 50 megawatt farm in Texas. Bitcoin mining in Texas has increased thanks to low electricity prices and friendly local officials.
Since halving is already putting a lot of pressure on the miners and reducing the hashrate, this latest stress test will re-test Bitcoin’s resilience.