China’s cryptocurrency miners look to capitalise on policy shift and cheap power, despite trading ban
- In a surprising policy shift in late October, China’s economic planning agency removed cryptocurrency mining from a list of activities set for elimination
- China dominates 70 per cent of global mining operations, although trading cryptocurrency is banned
China’s cryptocurrency miners are cautiously celebrating a government decision not to ban the energy-intensive industry even as authorities launch a fresh crackdown on trading virtual currencies, though operators remain wary of more robust regulation in the future.
In a surprising policy shift in late October, China’s economic planning agency, the National Development and Reform Commission (NDRC), removed cryptocurrency mining from a list of activities set for elimination by the end of 2020.
Mining is the process of verifying transactions on a blockchain network, a decentralised system that underpins cryptocurrencies like bitcoin or ethereum. Miners are rewarded with digital coins for being the first to validate blocks of transactions on the digital ledger by completing complex algorithmic problems.
Although trading cryptocurrency is banned in China, mining is not, and the country dominates 70 per cent of global mining operations thanks primarily to cheap electricity supply. Its nearest competition, India and the United States, accounted for 4 per cent and 1 per cent of total mining share respectively, according to blockchain.com.