Photo: iStock
State-backed media have indicated there is high-level understanding in Beijing that the PRC needs to have its own centralized and controlled cryptocurrency that could be very similar to Facebook's Libra coin. Photo: iStock

When China stomps its feet, the world usually reacts. When it comes to Bitcoin and digital currencies, however, the industry has grown so indifferent to the latest Beijing crackdown that markets did not even blip at this week’s proposed mining ban.

When China banned cryptocurrency trading and exchanges in late 2017, markets plunged. Since then the People’s Republic has relentlessly crushed anything to do with the industry aside from its underlying blockchain technology.   

Earlier this week reports emerged that the government’s National Development and Reform Commission (NDRC) has proposed new rules that may result in the permanent closure of all the crypto mining farms in the country.

The economic planning body has concluded that Bitcoin mining, as well as over 450 related activities, should be phased out. The state organization cited non adherence to relevant laws and regulations, unsafe practices, wasted resources, or environmentally unfriendly operations as the primary reasoning behind the decision.

Crypto mining was top of the Commission’s list of practices that should be eliminated immediately. China has long been the world’s top destination for Bitcoin mining farms due to favorable energy prices from coal -rich regions and easily accessible hydro power. China is currently the dominant force in crypto mining hardware production with companies such as Bitmain controlling a large percentage of the industry.

However, many industry observers actually think this latest announcement is good news for the crypto ecosystem. Chinese mining farms have had too much control over the process, which has led to centralization issues. The entire ethos of Bitcoin and its brethren is that of a decentralized, peer-to-peer form of finance. If Chinese mining farms control the block production process to validate Bitcoin transactions, they effectively control the network.

Michael Zhong, analyst at Beijing-based crypto research firm TokenInsight, confirmed this generally accepted opinion: “Bitcoin mining will no longer be dominated by China but become more decentralized,” he said. Others such as managing partner at blockchain investment firm Kenetic, Jehan Chu, think it is part of a wider effort to control the industry; “I believe China simply wants to ‘reboot’ the crypto industry into one that they have oversight on, the same approach they took with the Internet,” he told Reuters.

Either way, Bitcoin and crypto markets did not react to the news despite the spread of what crypto loyalists call “FUD” – as in “fear, uncertainty and doubt” –  on the part of many crypto sceptics.

Bitcoin has held onto gains from its rally last week and is currently trading above $5,200. This means it is up 40% since the beginning of the year, which is quite a feat for an asset that most of the mainstream media had completely written off by the end of 2018.

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