About 20 days ago, we learned that some high ranking Chinese officials had put back on the table their will to ban both mining and trading of crypto-currencies. So far not taken seriously, these guidelines are starting to be implemented in some areas.
Xinjiang province implements government measures
This is it! It looks like the Chinese machine has finally gotten going and the restrictions on Bitcoin mining are being enforced. According to information relayed and verified by our colleagues at The Block, some Chinese provinces have put into effect the government’s intention to ban Bitcoin mining.
On June 9, the Changji Hui Autonomous Prefecture Reform and Development Commission, located in China’s Xinjiang province, issued a notice to officials in the Zhundong Technology and Economic Development Park. This issued notice would include an order to shut down all cryptocurrency mining activities within the same day.
The closure of Bitcoin mining sites in China. What implications
This business park is primarily dedicated to power generation via fossil fuels. This one also hosts several mining farms connected to said thermal power plants. Later in the day, it was the turn of Qinghai province to issue a similar notice against the mining farms installed on its soil.
In both cases, the electricity consumption of the mining activities is pointed out. Indeed, mining activities, especially those linked to thermal power plants, do not seem to be part of the zero-carbon objectives that China would like to achieve by 2060.
What are the consequences for hashrate?
As it stands, it is difficult to estimate the impact on hashrate of the closure of the mines in Zhundong Park. Indeed, although Xinjiang province alone accounts for 35% of China’s hash power, it would seem that not all the activities there have been affected by this shutdown notice.
Qinghai province, meanwhile, accounts for 0.25% of China’s mining activity according to data compiled by the Cambridge Center for Alternative Finance.
For the moment, the hashrate curve does not seem to have been impacted by the thousands of machines that made up the mining parks of the two regions going offline.
It remains to be seen whether other provinces will also follow the movement initiated by Qinghai and Xinjiang. On their side, many miners had already started to sell or migrate their infrastructure following the government announcements.