Shortly after seeing its price leap over 11% thanks to Peter Thiel’s Founders Fund, bitcoin recently saw its progress halted. A new report suggests China’s central bank, the People’s Bank of China (PBOC) may indirectly regulate bitcoin mining in the country.
The cryptocurrency saw its value go down from a 24-hour high of $15,400 to $14,600 before recovering. At press time, one bitcoin is currently trading at $14,891, according to data from Cryptocompare.
According to Reuters, an unnamed source revealed that PBOC officials discussed limiting the power use of bitcoin mining operations in the country in a closed-door meeting, and called for rectifying irregularities in electricity use of some cryptocurrency mining operations.
The country’s central bank told members of the Leading Group of Beijing Internet Financial Risks Remediation that it can’t directly regulate bitcoin miners’ power usage, but it can ask local governments to do so. This way, it can gradually reduce the scale of their operations, potentially clamping down on bitcoin mining in the country.
The move would be part of China’s bitcoin crackdown, that saw the country ban cryptocurrency exchanges and initial coin offerings (ICOs) last year. At the time, experts suspected the country would move against cryptocurrency mining, but the ban never came.
Notably, the Leading Group of Beijing Internet Financial Risks Remediation is the same government office that ordered the closure of bitcoin exchanges. A potential reason for the move would be bitcoin’s power consumption. Per Digiconomist.net, bitcoin’s annual energy consumption has grown past that of countries like Belarus and Bulgaria.
Bitcoin mining ban could help decentralize industry
Due to the availability of surplus electricity and cheap labor, China is currently the source of about two-thirds of the bitcoin network’s hashrate. This means a ban in the country could decentralize the network’s hashrate distribution.
Given that the PBOC may go for a gradual crackdown on the country’s cryptocurrency mining operations, those who wish to move out of the country will be able to do so. Moreover, the gradual decrease in China’s hashrate could give other miners time to gradually scale their operations.
Separately, China’s official People’s Daily newspaper published a piece labeling bitcoin a “bubble.” Per the newspaper, bitcoin’s scarcity, high liquidity, and decentralization are excuses for the so-called speculation that’s driving the cryptocurrency’s price up. As such, the piece concludes, caution is advised when it comes to cryptocurrencies, given they’ve seen sharp falls before.