China’s Sichuan Province is forcing electricity suppliers to stop providing service to digital currency miners by June 25th at the latest. On June 18th, Sichuan published a document that named 26 of the province’s largest cryptocurrency miners by name and requested that their electricity providers stop supplying power to them. This event comes just a few weeks after China’s State Council said that digital currency mining was a financial risk and that the digital currency mining sector needed increased monitoring.
According to local news outlet PaNewsLab,
“Mine owners have been notified that due to the discussion of Bitcoin and other virtual currency mining at the meeting of the Ya’an Municipal Government in Sichuan on June 17, all power stations in the region will be shut down before 22:00 for self-examination, and the specific power-on time will end tomorrow (June 18th). [in addition], all mines must be shut down before the 25th, including the consumption of electricity and the abandonment of hydropower.”
China has threatened to ban Bitcoin and crackdown on digital currency mining several times in the past, but this time around the Chinese government is taking action.
What does this mean for mining?
According to the Cambridge Bitcoin Electricity Consumption Index, China accounts for 65.08% of the hash power supporting the BTC network. A nationwide ban on digital currency mining in China is likely to have a ripple effect on the blockchain networks Chinese miners are putting their hash power towards. It is rumored that China-based miners are looking to relocate rather than close up shop; however, there will be a period of time–that most likely begins on June 25th–where the miners will have to take their mining machines offline and either mail them or physically take them to a new mining facility. When this takes place, there will be far less hash power supporting digital currency networks than there usually is. Shortly after the announcement was made in Sichuan, Ethereum’s hash rate fell by 7%.
Digital currency markets have reacted negatively to China’s threats toward digital assets. Since May 21st, when China first announced that they were adding digital currency mining to the list of high-risk activities, the price of BSV has fallen from $204.10 to $156.42–a 23% drop in price.
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