Cryptocurrency Ban in China Forces Some Bitcoin Miners to Flee Overseas, Others Sell Out

Cryptocurrency Ban in China Forces Some Bitcoin Miners to Flee Overseas, Others Sell Out to State-Owned Crypto Startups

Bitcoin mining is set up in a field in Sichuan, China. On Sept. 24, China banned local access to virtual private network (VPN) providers.

In addition to the VPN ban, which effectively halts access to crypto mining sites in China, the country also announced the creation of a new task force to oversee crypto-related risks and the implementation of regulations around the world.

A number of cryptocurrency startups have already moved their operations to countries that are considered more friendly to crypto.

But one of the industry’s largest miners, Canaan Creative, is expanding its operation in Iceland, with the company setting up the world’s first large-scale crypto mining farm.

Meanwhile, a Chinese crypto exchange is setting up its own cryptocurrency for consumers to use in trading with the help of mining.

China's sweeping ban on cryptocurrency mining has paralysed an industry that accounts for over half of global bitcoin production, as miners dump machines in despair or seek refuge in places such as Texas or Kazakhstan.

On Thursday, China's State Council Information Office called on exchanges and mining pools to suspend trading of cryptocurrencies to prevent further price fluctuations, a clampdown that took many by surprise.

Miners in a number of countries have already moved to other jurisdictions to try and save the operation of their machines.

"If the authorities force shut, I'll be forced to leave China. I don't know what will happen after that," said Xu, a miner in the southern Chinese city of Shenzhen, who only gave his surname.

He recently bought two machines worth $40,000 and is using one of them to generate and sell cryptocurrencies on local exchanges. The other one is sitting idle, he said, though he is considering a trip to Kazakhstan, which is not affected by the government's rules.

'Totally unplanned'

According to a government notice, people who use machines for mining crypto currencies must transfer their holdings into fiat currency by Aug. 31, a deadline set to coincide with the start of a six-month trading ban.

"The move is totally unplanned and unexpected," said Zhao of BTCC, one of the exchanges which was the target of a raid by authorities last week.

"The government must be worried about price fluctuations as there was no notice beforehand."

Cryptocurrencies have been beset by wild swings in value since they were first created in 2009 and they have soared to near $20,000 this month before a sharp dive as Chinese regulators clamped down.

The State Council Information Office did not immediately respond to a request for comment.

Zhang Li, a blockchain consultant who writes a blog on bitcoin in China, said it's impossible for the government to stop mining as there are lots of users in China, but he expected regulators to force exchanges and mining pools to halt operations by Sept. 1.

 

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