As reported by People’s Daily, China’s largest Newspaper group, Bitcoin mining companies in Mabian Yi Autonomous County have been shut down or relocated indefinitely. Mabian Yi Autonomous County is home to the prosperous mining industry in southwest China’s Sichuan province, and the reason for the situation is unclear.
The shutdown is made more puzzling by the fact that the value of Bitcoins has exceeded now 15,000 RMB, and many exchange platforms are battling for mining resources after the Central Bank of China had banned the deposit and withdrawal of bitcoins earlier this year.
But accord to local Bitcoin miners in the County, they were not ‘forced’ to relocate, but they are unwilling to talk more about the shutdown. The Bajiaoxi Mining Factory that is located in Bajiaoxi Hydropower Station is one of the affected mining factory’s.
As a result of the shutdown of the mining company, the hydro-power station is projected to lose someone million RMB ($147,000) in electricity charges per month, which will be a huge loss as a result of this latest developments. A mining company owner in the area said they too will suffer big losses from the shutdown, as well as from the costs of relocation and construction as they look for another suitable location.
Bitcoin mining efforts are global, and peradventure, if mining is banned somewhere at a particular time, it does not change the total amount of bitcoins available in circulation, and so the global price will not fluctuate or be negatively affected much by this situation, an industry insider said.
Another industry insider that was reluctant to reveal his name said China is home to the largest amount of bitcoin mining factories in the world, but the bitcoin mining industry is under loose supervision.
A member of staff from the information office of the State Gird Sichuan Electric Power Company said managing the electricity consumption of mining companies is beyond their supervision.
A local official said the closure of the Bajiaoxi Mining Company was aimed at cracking down on the purported case of illegal cash operations and on controlling systemic risks. However, the available document shows that the mining company is not involved in any sort of illegal activities that could warrant such a crackdown.
According to Zhang Jun, a senior researcher with the Taiyiyun Strategic Research Center, if the mysterious closure of the mining companies forced them to conceal their mining activities, it would harm supervision efforts and would invariably result in economic hardships of those whose livelihoods depend on bitcoin mining. He also added that miners want the industry to be regulated so that they do not have to hide if their mining activities are illegal.
Could it be, at least in the short term, that potential shutting down mining companies in China is good for the price of bitcoin?