Recently, the world of digital currencies has been shaken to the bone by the news and actions by the Chinese government. First, the People’s Bank of China shut down all Initial Coin Offerings in the country and ordered the companies that raised money through ICOs to return the money in order to protect the investors and their funds. After that, it was reported that digital currencies might be banned altogether in the country, which caused even bigger problems all over the world.
China is currently one of the biggest digital currency markets in the world and the news that they might be shutting down all digital currency exchanges had a huge effect on the market. Even before the news was officially confirmed, one of the biggest digital currency exchanges in China announced that they will be shutting down their operations completely. Several other exchanges followed the suit.
Bitcoin Mining in Jeopardy
However, there is another aspect of the digital currency market that was not so much in the focus in the midst of all those happenings. Nearly 70 percent of the world’s Bitcoin mining operations are conducted in China and even though the authorities have said nothing about the mining business yet, many believe that miners and their operations are the next on the authorities’ list. With that kind of infrastructure, China has become the world’s leader in the production of Bitcoins.
Before the bans on digital currencies and ICOs, many Chinese investors were thinking about opening Bitcoin mines and for many, that kind of business brings a lot of profit. Yet, at this moment, many of them are not sure whether to go through with their plans or to wait and see what will be happening in the weeks to come. Setting up a Bitcoin mining operation is not an easy job and it requires a lot of money (more than a million dollars) and an access to cheap and good electricity. For many of those reasons, China was an ideal place for Bitcoin mines but now things are changing.
Miners Apprehend Government Will Come after Them Next
Many of those miners are now afraid that the next step of the Chinese authorities will be to ban Bitcoin mining industry which would prove to be catastrophic for miners who have already invested several million dollars in those businesses. Besides that, a lot of people would lose their jobs as maintaining Bitcoin mines is not a simple task and it requires a lot of personnel.
At this moment, it is known that the Chinese authorities have ordered digital currency exchanges to stop trading Bitcoin but they have not said or done anything against possession or production of Bitcoin. Because of that, miners have a big hope that they will be allowed to continue with their business even though China has been closed for their products. On the other hand, more and more reports from the Chinese government indicates that Bitcoin might be completely banned in the country and that would create huge problems for miners as they would be forced to shut down their businesses and suffer significant financial losses.
Written by Ivan Potocki
