Another Chinese province bans Bitcoin mining—sort of
Over the weekend, cryptocurrency-focused media outlets reported that China’s lush southwestern Yunnan province had become the latest Chinese Bitcoin mining hub to ban the practice, giving miners until the end of June to close up shop.
But days later, media including CoinDesk and Forkast retracted their reporting, deciding that a screenshot of what appeared to be the government notice was a fake. Yunnan—which accounts for 5% of global Bitcoin mining—isn’t banning the act; at least, not directly.
According to comments from the Yunnan Energy Bureau, reported by local media, the province had actually instructed authorities to “clean up” the cryptocurrency mining industry’s electricity usage with a crackdown on mines that bypass the state grid by striking supply deals with power stations directly.
Yet Yunnan’s move to regulate the industry could be a de facto campaign against the mining of Bitcoin and other digital currencies. Securing a direct electricity supply is cheaper for miners, since the state grid charges utility fees. Eliminating access to cheap, illicit electricity could make mining operations less profitable, effectively curtailing the industry in the province.
Forcing miners to connect to the state-run grid will give local authorities power to implement a ban at a later stage, if they so choose, as China’s central government toughens its stance against mines. Last month, China’s cabinet, the State Council, pledged to crack down on Bitcoin mining for the first time. China’s Inner Mongolia banned Bitcoin mining in May, while authorities in Xinjiang instructed miners clustered in an industrial hub to shut down last week.
But whether Yunnan eliminates Bitcoin mining is unlikely to influence the cryptocurrency’s price. Miners are likely to move to more welcoming jurisdictions.
Some Chinese miners have already migrated to countries in Central Asia, such as Kazakhstan and Afghanistan. Even North America is emerging as a growth market for the industry. Bitcoin’s price rallied to over $40,000 per coin over the weekend, hitting its highest price since a collapse from close to $60,000 in early May.
The rally had little to do with news from Yunnan. Like so many moves in the Bitcoin space, the weekend spike appeared tied to a tweet from famed cryptocurrency commentator Elon Musk.
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