The government of the People's Republic of China is reportedly considering bringing an end to all crypto mining in the country.
On Tuesday (April 9), Reuters reported that China's National Development and Reform Commission (NDRC) had announced on Monday that it was "seeking public opinions on a revised list of industries it wants to encourage, restrict or eliminate"; this list, which is known as "Guiding Catalogue for the Adjustment of Industrial Structure", has been issued since 2005.
The Guiding Catalogue is "a document supplementary" to the "Interim Regulation on Promoting the Adjustment of Industrial Structure". When it was first issued, it covered "more than 20 industries that include agriculture, water conservancy, coal, power, transportation, information industry, iron and steel, nonferrous metals, petrochemical industry, building materials, machinery, light and textile industries, service industry, environmental and ecological protection, conservation and comprehensive use of resources, and etc," and in total, there were "539 articles in the encouraged category, 190 in the restricted category and 399 in the to-be-eliminated category."
The Reuters report says that the draft version of the Guiding Catalogue has added cryptocurrency mining to the "over 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." Apparently, this document "did not stipulate a target date or plan for how to eliminate bitcoin mining, meaning that such activities should be phased out immediately." Until May 7th, it is possible for the public to submit their comments on the proposed changes to the list.
The report also quotes the state-owned Securities Times as saying on Tuesday that this draft list “distinctly reflects the attitude of the country’s industrial policy” toward the crypto industry.
Although the People’s Bank of China (PBoC) banned initial coin offerings (ICOs) in September 2017, until now, crypto mining has been legal, though discouraged due to the huge amount of energy it uses. For example, on 4 January 2018, South China Morning Post (SCMP) reported that, according to its unnamed sources, China aimed to "drive cryptocurrency miners out of business by limiting power consumption" because "Chinese officials are concerned that bitcoin miners are taking advantage of low power prices in some areas and affecting normal electricity use in some cases." More interesting, this article also mentioned that the curbs " will also involve other regulators" such as the NDRC.
Of course, this move by the Chinese government should come as no surprise to crypto mining companies that still have mining facilities in China. For example, Bloomberg reported earlier today that Bitmain Technologies has already "established mining operations in the U.S. and Canada."
Twitter account cnLedger, which reports on the crypto/blockchain related news in China, said on Monday that over-the-counter (OTC) desks, which have been the "almost only way" to buy cryptocurrency in China via fiat currency since the PBoC's ICO ban, are seeing strong buys for tether (USDT), with Chinese traders/investors first buying USDT and then converting it to other cryptocurrencies such as Bitcoin at spot exchanges of their choice:
1/ Chinese markets reveal strong buys. OTC (Over-The-Counter) trades, the almost only way to buy bitcoin with fiat in China, showing considerable $ premium (1 USDT = 7 CNY) over the official rate of 1 USD = 6.7 CNY. pic.twitter.com/bd0n0DGFVU— cnLedger (@cnLedger) April 8, 2019
2/ Why the USDT premium going up? After the PBoC ICO/exchange ban, the most convenient way to buy cryptos in China, is to buy stable coins like USDT first using OTC, and then trade it into any cryptos you want in exchanges.— cnLedger (@cnLedger) April 8, 2019