Once the global hub for all things bitcoin, China is now doing its best to drive the cryptocurrency out of its territory. After cracking down last year on exchanges where digital currencies are traded, the Chinese government has bitcoin mining by country been moving quietly to evict the country’s vast community of bitcoin miners.
That’s forcing them to look into moving to other countries, with Canada attracting a lot of interest. Unlike traditional currencies like the dollar, the creation of bitcoin isn’t controlled by central banks. Instead, it’s “mined” by computer algorithms that solve increasingly complex math problems. People can earn money unearthing cryptocurrencies from the digital deep by running the mining software on computer systems of varying sizes, a process that requires a lot of electricity. China, according to a study last year by the University of Cambridge. But the industry is feeling unwelcome these days. It’s a hard time for the mining business in China,” said Jack Liao, who owns several bitcoin mines in the country.
He said in a recent interview with CNNMoney that he’s thinking about moving some of his operations overseas, with Canada, the U. Liao is the CEO of cryptocurrency mining firm Lightningasic, which is based in the southern Chinese city of Shenzhen. Five other owners of bitcoin mines in China also told CNNMoney in the past month that they were considering moving operations out of the country because of pressure from the government. Most declined to be identified by name for this article due to the sensitivity of the situation. The Chinese government wants cryptocurrency miners to make an “orderly exit” from the industry because their operations are bad for the environment, don’t pay tax and can be a fire hazard, Liao said, citing reports in Chinese state-run media.
China has shown its willingness to crack down on other aspects of the cryptocurrency industry. It forced exchanges inside the country to shutter trading operations in September. And it’s now reported to be moving to block the websites of overseas trading platforms. The Chinese government didn’t respond to requests from CNNMoney for comment on its stance on bitcoin mining and trading. Experts say the Chinese government, which imposed controls in recent years aimed at stopping too much money from flowing out of the country, is wary of how cryptocurrencies can enable people to move funds outside of the traditional financial system and potentially put them to nefarious uses.
Efforts by governments around the world to take an increasingly hard line on cryptocurrencies have contributed to the recent sharp decline in their prices. For the people running bitcoin mines in China, the big question at the moment is figuring out where to go. Running a bitcoin mine has a very specific list of requirements. The energy needs are huge for one thing. Digital currency website Digiconomist last year reported that one bitcoin mine it visited in Inner Mongolia used the same amount of power that’s needed to continuously fly a Boeing 747. You need a country that can provide such a big capacity at a reasonable price,” Liao said. Miners also want a government that’s going to take a hands-off approach to regulating cryptocurrencies.