Bitcoin Mining in China Faces Ban – Crackdown to Start From Inner Mongolia

Considered as the hub of crypto mining, China isn’t finding mining industry fruitful, particularly for the country’s economy. The impression for cryptocurrency mining came to light when regulators in the autonomous province of Inner Mongolia issued a notice, ‘Notice on checking and rectifying virtual currency mining’. For checking cryptocurrency mining, the notice was given by five departments of Inner Mongolia. Moreover, clarifying the stance on mining, the regulator stated:

The virtual currency ‘mining’ industry belongs to the pseudo-financial innovation unrelated to the real economy, and should not be supported.

The five departments of Inner Mongolia included The Financial Office, Development and Reform Commission, the Office of the Ministry of Industry, the Big Data Bureau and the Public Security Department. As per their consensus, the crypto mining industry isn’t worthy of attention. Quite evident in the aforementioned statement, departments are planning to drop support for the mining industry. They have concluded that the mining industry is insignificant for China’s economy.

The immediate plan of the departments is to rectify and clean the mining industry within the province. Consequently, departments have decided to divide the process into two phases. While the first phase will begin from September 3 to September 25, 2019, the second phase will be implemented from October 10th onwards till October 30th, 2019.

During the first phase, self-examination and self-correction will be executed which will then be reported to the Ministry of Industry and Information Technology. The deadline set for reporting is 30th September, before the beginning of the second phase that will be dedicated for supervising and rectifying the industry.

Although the idea regulators had for crypto mining industry has been revealed, the consequences of the phases planned on the crypto industry remain ambiguous. So far, the processes of rectifying and supervising the mining industry haven’t been addressed and explained deeply.

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However, according to the founding member of Primitive Ventures, Dovey Wan, steps taken by Chinese authorities to suppress crypto mining will not be impactful. Wan, who is also the executive director of Hardcore.Fund, shared her take on Twitter.

Cryptocurrency mining such as bitcoin mining, has been concentrated in China for quite a long time. Reports revealed that about 70% of the world’s bitcoin was mined in China  and in China, the area of Sichuan province accounts for most bitcoin mining activities. It was reported that 70% of bitcoin mining in China took place at Sichuan alone.

Since the cost of electricity near Sichuan’s Dadu river is extremely low, the location is very favorable for cryptocurrency mining.  Apart from Sichuan, Xinjiang, Inner Mongolia and Yunnan are also among favorite Chinese sites preferred by crypto miners.

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Although the mining industry is now developed and expanded in China, the problems of illicit mining troubled authorities for long. Alone in Sichuan, about 30,000 mining machines were deployed illegally, without the authorization and approval of the local government.

Previously, it was estimated that electricity of roughly $3.2 million worth was stolen last year to carry out mining activities in China. Recently, Chinese authorities arrested 15 men, involved in illegal crypto mining. The group installed cryptojacking malware in internet cafes for several years. It was discovered that as much as $14 million were generated through years of mining by the company.

China began its crackdown against illegal miners a few months ago. Despite strict rules and regulations, the Chinese aren’t refraining from crypto mining. In April 2019, The National Development and Reform Commission (NDRC) sought public opinion on regulating a list of industries. In addition to unlawful activities, due to lack of security and usefulness, bitcoin and crypto mining ban was proposed.

Bitcoin mining is a very important process for the bitcoin network. It maintains the security of bitcoin blockchain while rewarding the miners upon completion of a new block. ln the future, it would be of interest to see how the distribution of miners, changes due to pressure from Chinese authorities.

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Fatir Malik

Electrical engineer by profession, turned into blockchain developer. Fatir contributes regularly with his insights about latest developments in fintech sector. Contact the editor at

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