Reuters reports China Wants to Ban Bitcoin Mining
The National Development and Reform Commission (NDRC) said on Monday it was seeking public opinions on a revised list of industries it wants to encourage, restrict or eliminate. The list was first published in 2011.
The draft for a revised list added cryptocurrency mining, including that of bitcoin, to more than 450 activities the NDRC said should be phased out as they did not adhere to relevant laws and regulations, were unsafe, wasted resources or polluted the environment.
It did not stipulate a target date or plan for how to eliminate bitcoin mining, meaning that such activities should be phased out immediately, the document said. The public has until May 7 to comment on the draft.
State-owned newspaper Securities Times said on Tuesday the draft list “distinctly reflects the attitude of the country’s industrial policy” toward the cryptocurrency industry.
Last week, the price of bitcoin soared nearly 20 percent in its best day since the height of the 2017 bubble, and breaking $5,000 for the first time since mid-November, though analysts and traders admitted they were puzzled by the surge.
What’s It Mean for Cryptos?
I suspect nothing actually. It does not change my opinion one way or another.
The recent rally appears to be technical.
After a long huge plunge, traders believe the bottom may be in. I don’t.
Mike “Mish” Shedlock
more importantly, the crypto ride upwards is far from determined, nor is the bottom set. There is a valid point to say that for Chinese the use of crypto can be a way of exporting savings…maybe. But like Mish, I doubt that the floor price has been reached for crypto currencies.
Bitcoin is a symptom. The root cause of it’s existence is the distrust of fiat currency.
Distrust and dysfunctionality.
Many Chinese folks are natural gamblers. Part of the reason, I believe, for the success of their economy currently. They’re willing to bet that taking on a pile of debt will pay off big in the end. But being a natural gambler, also leads to a lot of natural scammers. So the Chinese are also very good at making and selling things that aren’t quite what they are supposed to be.
I tend to think the Chinese government has a difficult job of corralling the scams in the Chinese economy. Too many people getting ripped off ends up making the ChinCom government look bad. And there is no bigger scam than bitcoin.
I suspect it will mean higher crypto prices, not lower. We want what we can’t have.
China has a capital flight problem. It’s as simple as that.
In a strange twist banning mining might just push up the speculative price. Supply was to be limited anyway but now rate of addition could be limited too. In turn that can make it more lucrative to mine outside China.
This smacks more of limiting hard to track cross border transactions out of Yuan – almost desperation on the part of the Chinese. Saying more about Chinese worries than Bitcoin future.
Only if the ban use of Bitcoin will it matter.
They might be trying to limit C02 or preparing for their own crypto currency and want to reduce competition.
Unintended consequences?
Whatever you think of Bitcoin, if it scares authoritarians and authoritarian governments is it a bad thing?
Governments are the bad thing. Anything they are against, sorts under enemy of my enemy.
The cost to mine bitcoins and even the number of miners mining bitcoin does not affect the supply of bitcoins. It is illogical to say that China banning bitcoin mining will raise the price. As the long term effect of a china mining ban on supply would be zero. the over all security of the network may drop for a short time and that’s about it.
It impacts the rate of supply if the number of miners falls and should offer a lift in price, even if only temporary, if demand remains the same.
Once every two weeks the difficulty of mining bitcoin is adjusted to ensure the supply stays constant . Any drop of in number of miners would there for only affect supply for a maximum of two weeks. Then the supply reverts to the expected supply.
It has already been risky to buy Bitcoins in China for a long time. So, Chinese miners have been happy to nominally lose money on mining; as long as the expenses and losses are in Yuan which can be tracked and restricted; while the gains are in Bitcoins which can be converted to Dollars in Vancouver.