Bitcoin Mines in Chinese Province Sichuan Allegedly Forced to Shut Down

Reports have emerged detailing the alleged forceful cessation of large-scale bitcoin mines in China’s southwest, with insiders quoting a lack of state-sanctioned regulatory policy regarding cryptocurrency mining as the official reasoning cited for such.

Also Read: Russian Government To Introduce KYC Guidelines For Cryptocurrency Purchases

The Closures Come at a Critical Moment for Mining Businesses, as Bitcoin’s Price Has Tripled over the Course of 2017

The absence of government-backed regulation over the practice of bitcoin mining has apparently prompted the Chinese central government to forcefully influence the cessation of many commercial bitcoin mining operations in Sichuan.

China’s province of Sichuan has attracted great interest from bitcoin investors and entrepreneurs in recent years, as the province has abundant access to hydropower and offers huge savings in electricity costs for mining businesses that operate in Sichuan.

The closures come at a critical moment for mining businesses, as Bitcoin’s price has tripled over the course of 2017. “The price is so high at the moment,” said a bitcoin mine manager in an interview with Yicai Global, “shutting down costs mine owners hundreds of thousands of yuan every day.”

The reports appear at odds with the Chinese government’s recent to decision to again allow deposits and withdrawals in fiat currencies to be processed by the country’s major exchanges. The moves come ahead of announcements that The People’s Bank of China will roll out regulatory measures for bitcoin trading designed to prevent money laundering in June.

For China, a Regulated Bitcoin Trading Industry Will Generate Wealth That Will Be Under the Control of the Chinese State

“Bitcoin regulation that the central bank conducted mainly focused on financing and leveraging trading among platforms,” Zhang Jun, a senior analyst at Tai Cloud Research Institute, told Yicai Global. Sichuan officials echoed this sentiment, also stating that “mining is carried out by companies of their own accord” – implying that mining businesses have taken it upon themselves to act outside of the legal apparatus provided by the Chinese government.

The move by China to regulate cryptocurrency trading but crack down on mining appears contradictory at first, but closer analysis of the marxist principles that underpinned the origins of the Chinese central government’s economic policies illuminate a logic to adopting these positions. For China, a regulated bitcoin trading industry will generate wealth that will be under the control of the Chinese state. The industry will be under the control of the central government, and investors would predominantely represent individuals who are already living in cities that are integrated into the contemporary Chinese state-capitalist societal mode.

Mining, on the other hand, will likely flourish in areas such as Sichuan, provinces outside of the major Chinese economic center that are yet to be fully developed and integrated into the contemporary Chinese economy, that can also offer investors abundant access to cheap electricity. This could pose great challenges to China’s attempt to further develop and centralize the vast populations that exist outside of China’s developed core, as greater access to blockchain technology could facilitate the emergence of a myriad of localized, informal economies operating outside of the control of the Chinese government.

Continued Contradictory Stances Likely

For a state whose legitimacy and existence depends upon delivering services with the greatest possible efficiency through the use of a centralized state apparatus, the risk of the economic liberation and autonomy made possible of bitcoin penetrating those provinces that are more autonomously governed is a threat that will be taken seriously.

The move toward holding two seemingly contradictory stances is likely to be indicative of future stances held by the Chinese government regarding cryptocurrency. It is very likely that the government will seek to guide those components of the cryptocurrency industry that will adapt well to China’s current economic landscape and regulation. This while forcefully restricting the development of the components of the cryptocurrency economy that may undermine China’s ability to centralize and control the economies of the entire Chinese landmass.

Do you think Chinese regulators will be able to prohibit commercial mining operations, or do you think the Chinese bitcoin mining industry will continue to operate underground?  Tell us your thought below!

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  • Dr. Bubó

    “Samuel is currently working on a thesis that provides a neo-marxist analysis of Bitcoin and blockchain technology.”

  • Khurram Javed

    They should shut down all miners blocking Segwit. ETH is about to take over BTC market cap any day now because bitcoin is outdated. Thanks a lot BU proponents.

  • It is the Chinese way…you should never trust them to understand where the profit comes from. They are hard headed and greedy and stand in the way of their own luck every day of their existence. It is funny how the regulators conflate exchange regulation with the mining operation as in violation of the exchange regulation. Well of course idoits, chinese regulators, you need to mine to confirm transactions and you need to reward miners for working on your blocks. I think they see the awards for mining blocks as an avoidance of tax and a way to transfer wealth. There goes their mining foothold in everything crypto. Confucius says, The Dragon will eat itself soon enough.

  • sjs

    Culling a few Chinese miners is not necessarily a bad thing, it’ll decentralize mining activity.

  • I Am Contraire

    “Do you think Chinese regulators will be able to prohibit commercial mining operations, or do you think the Chinese bitcoin mining industry will continue to operate underground? ” The Chinese govt is not so concerned about the impact of Bitcoin on its economic landscape. They are much more involved in the realignment of Global economies which will at some point be Gold backed. This will especially impact the West as the transfer of economic power shifts into their corner. The role of bitcoin, and crypto’s in general are a minor annoyance, however they are smart enough to allow their citizens to utilize BTC, just as they encourage purchasing of silver and gold by their citizens.