China announced restrictions on electricity supply for the Bitcoin miners. This step of blocking the digital currency mining is said to have a motif of saving of thousands of electricity units and reduction in cases of tax evasion in China.
China takes curbing measures on growing cryptocurrency market by limiting the electricity available to the Bitcoin mines based in China. The Chinese authorities have been constantly engaging in the activities to overthrow the cryptocurrency market. Last year, A Forbes news article confirmed that September witnessed Chinese government putting a ban on ICOs in China as part of their efforts to restrict crypto economic in China. Also, many crypto based Casinos and exchanges were subjected to bans in order to restrict the Bitcoin miners and traders.
Why China has to worry?
As a matter of fact, China is a hub for Bitcoin miners and the main reason for it is the subsidized electricity available in China especially in the hydro power region of Sichuan and Yunnan regions. The high electricity demand for the Bitcoin mining made it suitable for the miners to use the low cost power for setting up energy intensive hardware to verify crypto transactions and mine new coins.
As per the Bloomberg report, The People’s Bank of China is actively preparing a master plan to spoil the game for the Bitcoin miners in China who take unfair of advantage of the state’s resources and subsidies to mine coins and evade tax thereby making a twofold loss to the Chinese economy. Chinese officials have been instructed to investigate the high electricity consumption industries however, the officials of the Bank denied about any such proceedings taking place.
Impacts on a global front
The Bitcoin economy booms with demand and its acceptance from a wider Audience. Any curbing action in any form is set to bring concerns over the future of the digital currencies across the globe. Beijing’s sweeping efforts to scrutinise and ban the cryptocurrency is a setback for the current rising trend of the Bitcoin which saw a jump of over 15 times during the last year and is currently tending on $15,086. Senior market analyst for digital currencies at Oanda, London Craig Erlam stated that this decision of the Chinese government might have led to the Bitcoin off its highs and expressed his concern over the future of cryptocurrencies given the amount of power consumed in running the systems.
What lies ahead for Bitcoin miners?
With the Chinese government pushing hard for freeing its land from crypto miners we can expect some more hard measures coming from the Beijing authorities which may worry the crypto mining companies and trades based in China and other parts of the world. Indeed, the electricity requirements for the crypto systems to run are huge and pose a challenge to its sustenance.
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I am an entrepreneur and a writer with a bachelors degree in Computer Science. I manage the blockchain technology and crypto coverages at Coingape. follow me on Twitter at @arya_achal or reach out to me at achal[at]coingape.com.