Many Bitcoin mines in Sichuan province – one of China's largest cryptocurrency mining bases – were closed as of June 20, after local authorities ordered a halt to mining in the region on June 18 amid an intensified nationwide crackdown on cryptocurrency mining. The ban also means that more than 90% of China's Bitcoin mining capacity is estimated to have been shut down, at least for the short term, as regulators in other key mining hubs in China's north and southwest regions have taken similar harsh steps. Some industry players had hoped that regulators in Sichuan, where hydropower is abundant, could take a softer approach. But the latest ban underscores Chinese regulators' determination to curb speculative crypto trading to control financial risks, despite certain benefits to local economies, observers said.
“The exit window is closing, and we're scrambling to find overseas mines to place our mining devices,” a Sichuan-based industry insider, who spoke on condition of anonymity, told the Global Times, adding that a number of miners have suffered huge losses. The Sichuan Provincial Development and Reform Commission and the Sichuan Energy Bureau issued a joint notice on June 18, ordering local electricity companies to “screen, clean up and terminate” mining operations by June 20. The notice listed 26 firms that had been inspected and reported as potential cryptocurrency mining enterprises, including Heishui Kedi Big Data Tech Co and Kangding Guorong Tech Co. The notice also ordered local electricity companies to immediately stop supplying power to crypto mining projects they have detected, and conduct self-inspection and rectification. It also banned local authorities from approving new mining projects.
“We had hoped that Sichuan would be an exception during the clampdown as there is an electricity glut there in the rainy season. But Chinese regulators are now taking a uniform approach to overhaul and rein in the booming Bitcoin mining industry in China,” Shentu Qingchun, CEO of Shenzhen-based blockchain company BankLedger, told the Global Times. Xinjiang, Inner Mongolia and Yunnan province have all announced rules curbing Bitcoin mining. 'That means that more than 90% of Bitcoin mining capacity, or one-third of the global crypto network's processing power, will be suspended in the short term. As a result, Chinese miners must migrate overseas,” Shentu noted. He added that the price of mining machines could take a dive in the short term, as many crypto miners would dump their processing equipment. In May, senior Chinese officials said that it is necessary to crack down on Bitcoin mining and trading.
On June 21, the People's Bank of China (PBOC) held talks with a number of Chinese banks and payment institutions on speculation in cryptocurrencies, asking them to screen the capital accounts of cryptocurrency exchanges and over-the-counter dealers and cut payment links. The PBOC reiterated that no banks are allowed to provide registration, transactions or accounts for individuals who engage in cryptocurrency trading.
