he China National Development and Reform Commission (NDRC) has decided that it won’t be moving forward with its proposal of banning the mining of crypto within China’s borders. This news comes as a reprieve for cryptocurrency miners who can begin to or continue to, utilize China’s seemingly endless supplies to cheap and affordable hydroelectric power for mining activities.
On Wednesday November 5, the NDRC removed crypto mining from the list of industries that they wanted to see eliminated from the country. The new edition of the document, (China’s Industrial Adjustment Guidance Catalog) will take effect from the start of 2020.
<blockquote class="twitter-tweet"><p lang="en" dir="ltr"><a href="https://twitter.com/hashtag/Bitcoin?src=hash&ref_src=twsrc%5Etfw">#Bitcoin</a> bull Mike Novogratz highlights China effect on <a href="https://twitter.com/hashtag/Crypto?src=hash&ref_src=twsrc%5Etfw">#Crypto</a> with more countries gearing up for digital currencies.<br><br>Countries are lining up to walk down the aisle with <a href="https://twitter.com/hashtag/blockchain?src=hash&ref_src=twsrc%5Etfw">#blockchain</a> based currencies.<br><br>Warm up your engines.</p>— ReadBTC (@readbtc) <a href="https://twitter.com/readbtc/status/1193102193550868480?ref_src=twsrc%5Etfw">November 9, 2019</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
Recently, blockchain developers, cryptocurrency enthusiasts, and bitcoin investors were shaken up by an announcement by Chinese President, Xi Jinping. Xi declared his endorsement of blockchain technology and added that he wants China is to be the leader in technological developments involving blockchain.
This announcement led to a rise in the bitcoin price, increases in market value for Chinese-based blockchain companies and even revisions of university curriculums in the country in just one night.
Just two years ago, China had banned all crypto trading within the country and many operations were shut down within 24 hours. Mining operations continued, but earlier this spring, the NDRC had proposed a ban on mining operations, saying, that Bitcoin mining is a wasteful operation.
At the time of this announcement it was estimated anywhere between 60 to 70 per cent of all mining operations were happening inside China. Russia has even made plans to increase their own mining output, but their proposed plan will only be able to account for 20 per cent of mining operations worldwide.
It has not been openly declared why the NDRC has reversed its decision to include crypto mining as a wasteful industry, but with the timing of Xi’s endorsement of blockchain, it is possible there is a link. Nevertheless, many mining operations that had left the nation or had made plans to can now continue to use China’s energy rich areas such as, Sichuan and Xinjiang.
Canaan Creative, one of the three Chinese mining giants potentially will be the first China-based firm to launch public trading in the United States. Canna Creative filed a $200 million IPO request with U.S. regulators this summer.
Bitmain, another mining giant announced (just before the proposed ban on mining by the NDRC) that they would be setting up 200,000 units of mining equipment in China.
The last time we reported on the potential of a mining ban, the market did not react, and the same situation has occurred with the reversal of the decision. However, even though no immediate market benefits have come of this, it is the long-term implication that many investors many want to consider.
China apparently, won’t be using blockchain for its own digital currency, but with Xi’s endorsement of the tech, this could change. Additionally, no release date has been pegged for the digital Yuan.
With China in control of more than two-thirds of mining operations and confidence restored for future mining operators to create and expand operations, how much pull can China potentially have on the Bitcoin market?