China’s Crackdown on Crypto Mining Resurfaces
A statement by the cyberspace commission in China’s northern Hebei province has brought the Asian country back into the crypto mining circle after its involvement has been assumed to have ended following the crackdown on miners in May/June.
The commission says it wants to crack down on cryptocurrency trading and mining in the province for their huge energy consumption and for running contrary to China’s “carbon neutrality peak” goal.
Cryptocurrency exchange and transaction “are highly disruptive to China’s financial order, the financial risk is big,” it adds, and its “proliferation and spread will seriously affect economic and social development and directly threaten national security.”
It also says it will cooperate with other government departments like the province’s educational department, public security department, local financial regulatory bureau, and communications administration for the crackdown.
The departments are expected to check their information systems before Sept. 30 to ensure their computing power is not being used to mine cryptocurrencies illegally. The relevant departments will jointly carry out normal monitoring starting from October.
A rough translated version of the statement notes that any illegal mining activity shall be seriously investigated and those who engage in illegal transactions shall be strictly punished in accordance with the law.
News of a renewed crackdown on miners in China is not likely to affect the market price of top cryptocurrencies like Bitcoin particularly as the majority of Chinese miners have reportedly relocated in the last three months.
However, Bitcoin and hashprice, like other indices and metrics, have been down over the past week – Bitcoin’s hashprice down 18% over a 30-day period and 9% since the start of September while the 7-day moving average for Bitcoin’s hashrate has been up 6 EH from last week to be at 132 EH, according to Luxor Mining’s current hash index.
The drop follows the record of profits reported for North American miners, a rebound in rig prices and a strong hashrate recovery.
Luxor Mining notes in its weekly report that the crypto mining industry seems to be entering a period of respite following the initial sprint at the beginning of the Great Hashrate Migration.
It adds that the hushed period is not likely to last for long though especially “if catalysts (like Bitcoin’s price exploding) spur forth more activity to capitalize on the hashrate cavity left by China’s mining exodus.”
Before the Bitcoin sell-off that opened this week, GlassNode analysis shows that the amount of liquid Bitcoin on-chain has been in structural decline since the March 2020 market crash.
The analytics firm notes that the decline underlines a phase shift in investor appreciation of Bitcoin as a macro asset with a long time horizon.
Last week, it said long-term holders remained unshaken despite downside volatility. Almost 17% of supply was bought and held through significant corrections.
In a related development, while miners are being driven out of business in China, the government of Laos has authorized six companies to trade and mine cryptocurrencies within its borders.
A local report says a notice from the Office of the Secretary-General dated September 9 indicates that an energy purchase and sale agreement was signed between the Southeast Asian country and the companies which supposedly provided maximum anti-electricity price conditions to be used in the cryptocurrency operation.