Bitcoin mining in China – is this a big business in big trouble? The Chinese government had been making as if to ban the practice for a while, filling the headlines with will they won’t they speculation. Finally, miners were told to make an orderly exit, and major mining outfits are now looking for new homes overseas.
We spoke to Lincoln Yin, founder and CEO of Shanghai-based financial services firm RootAnt, about the situation on the ground.
Firstly, please tell us a bit about your company.
Based in Shanghai, RootAnt provides global financial institutions with a cross-platform, easy to use and user-friendly investing platform, products and services that improve the investor experience, and investor-personalized services based on data analysis. Our vertical solutions include brokerage, asset investment, wealth management and digital currency.
When did you first hear that Bitcoin mining was under threat in China?
The first time I heard that Bitcoin mining was under threat was on the 11th January 2018. After September last year when the government banned cryptocurrency exchanges, this action was very restricted by the government. The government thinks that there may be risks of money laundering, big losses for retail traders and too much electricity consumption. The electricity used for Bitcoin mining is equal to 0.17% of the consumption of the whole world. And 80% of the world’s Bitcoin mining is in China, namely in the Sichuan, Yunnan and Xinjiang areas.
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Have you received official notification regarding Bitcoin mining? Do you know of any Bitcoin miners who have?
Actually it’s not a real ban and not a clear deadline for the mining exit. But the government will regulate mining and cancel discounts for electricity fees, and will also charge tax for the business. The government thinks that mining is the power behind cryptocurrencies, however the government already banned ICOs. What’s more, the government is encouraging industry and commerce, but not virtual financial instruments, which may cause high risk of financial crisis.
How are Bitcoin mining companies reacting to the news? How do they plan to survive?
Now, some of the cloud mining platforms have already raised their platform management fee for users. As more than 80% of the world’s mining power comes from China, some mining companies are planning to migrate to overseas locations such as Russia, Iceland, Canada and Eastern Europe.
What was the effect of the ICO ban on the cryptocurrency community in China?
As China was one of the biggest markets for ICOs, of course the effect of the ban was huge. After the ban, the platforms provided services on an overseas platform, or provided OTC trading. After this shift, the market is growing even more. However now, this way is also getting regulated by the government.
What is the future of Bitcoin in China in your opinion? Does it have a future?
I think it has a future, as Bitcoin is working globally. The effect of the actions of one country or a few countries are limited among the whole world. And more people in China are starting to pay attention to it.
Do you have any other comments about cryptocurrency in China?
I think cryptocurrencies and the technology behind them (blockchain) have a lot of advantages, which could probably disrupt many industries, especially finance. But currently, many people in China are not trying to create real value, but are just making money from the bubble. So I think this is an inevitable trend, but would become tough in a short time. China’s government would not allow financial crisis to happen because of this.