China Sets the Ball Rolling on “Orderly Exit” from Coin Mining

Two leaked documents reveal that China’s top internet finance regulator, the Leading Group of Internet Financial Risks Remediation, has asked local governments to guide Bitcoin miners towards an “orderly exit” from the business.

The Leading Group of Internet Financial Risks Remediation, China’s main internet finance regulator, has instructed local governments to push Bitcoin miners towards an “orderly exit” from the business, as shown by a document leaked online.

We reported earlier that the People’s Bank of China (PBOC) had declared it could use its authority to require that local governments regulate Bitcoin mining companies with the mid-term goal of cutting production and reducing energy consumption.

The leaked document, which bears the date January 2, says:

“Currently, there are some so-called ‘mining’ enterprises that produce ‘virtual currencies.’ They have consumed huge amounts of resources and stoked speculation of ‘virtual currencies.’”

The notice was issued to local branches of the internet finance regulator and orders local governments to guide mining companies to shut down their operations. The authorities will assess miners based on parameters such as electricity costs, tax, land use, and environmental impact. The local regulatory offices should report on their regional mining facilities and provide information on how the exit process is advancing. The regulator expects the first report by January 10 and then regular monthly updates on the same date. 

The second leaked document was issued by the Xinjiang office of the internet finance oversight body. Dated January 4, it requires of the western regional authority to report on the exit by the fifth day of every month.

This document was confirmed as authentic by Zhang Qiubin from the Xinjiang office, but he would not comment on the one issued at the national level.

Both leaked files show that the decisions were taken during a November meeting between the internet finance regulator and its local offices.

Currently, China accounts for over 67% of the global power consumed for Bitcoin mining. Several leading mining equipment producers are based in the country, and some of them run mining pools.

It seems that the Chinese government also aims to prevent potential social chaos resulting from local investors losing money through speculation on cryptocoins.

While BTCC chief Bobby Lee expects China to eventually lift the ban on local crypto exchanges, the country may actually take additional steps to distance itself from the Bitcoin space.