Chinese Mining Units At Risk As New Regulatory Crackdown Looms

 
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Yingjiang Administration Bureau’s latest notification to the Bitcoin miners in China to register their businesses with the Power Supply Department appears to be setting a precedent which is expected to be the start of bigger challenges for the crypto industry in China.  The government notice has also warned that much of the businesses who do not register with the agency will have to face power cuts.

As per current practices the government supplies cheap electricity in the country and the notification takes note of the high-income some of the businesses using these low-cost power resources were generating in the province. Many of these industries are unregistered and hence they were not under check from the government and received unlimited supply.

The worries of the crypto community in China began a few months ago with the government banning crypto exchanges operating in the country. It is increasingly evident that the hard-liner approach by the Chinese government will de-accelerate the fast adoption of the non-fiat currency or limit other industrial developments such as crypto-mining industry in the country.

The Aftermath of the Exchange Ban

The latest crackdown on the cryptocurrency mining industry has set the cat among mice. China is the largest miner of cryptos in the world and has one of the highest computing powers in the world focused on this sector. Bitmain, is one of the largest mining firms located in Beijing, and also makes its own cryptomining hardware.

Cryptomining is concentrated in the coal-rich province of Yunnan, where electricity is also offered at subsidized rates of $4 per kilowatt/hr.

These two reasons were the driving forces for the province to become the epicenter of cryptomining in the country.

Compliance Issues

Chinese miner Red Li shares that

#btc mining facilities in Yunnan province are facing another round of compliance check. Failure to do so will result in power cutoff from the grid.”

The administration has been driving strict compliance with regulatory needs by local crypto miners. They are now required to provide tax reports, register in real names as well as show the source from which their business is being funded, apart from informing their power supply requirement each month.