China moves to shutter bitcoin mines

China is moving to eradicate the country's bitcoin mining industry over concerns about excessive electricity consumption and financial risk, reflecting authorities' judgment that cryptocurrencies are not a strategic industry.

A multi-agency task force has instructed provincial governments to "actively guide" companies in their respective regions to exit the cryptocurrency mining industry, according to a document seen by the Financial Times. The move to pressure miners follows China's shutdown of local bitcoin exchanges and its ban on initial coin offerings.

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Many bitcoin miners have established operations in remote areas without even registering a company. Some have also skirted Chinese regulations that forbid end users from purchasing electricity directly from power producers rather than grid operators.

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Bitcoin mining "consumes a large amount of electricity and also encourages a spirit of speculation in 'virtual currencies'", according to the document. Mining operations contradict efforts to prevent financial risk and to discourage activities that "deviate from the needs of the real economy", it added.

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The order does not call on regional authorities to shut mining operations directly, but rather to squeeze them out by strictly enforcing policies on electricity consumption, land use, tax collection and environmental regulation.

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Chinese miners are now seeking ways to transfer their operations abroad, either by physically moving factories or selling their expertise. Cheap electricity and a cool climate, which helps prevent computers from overheating, are the main requirements. Canada, Iceland, eastern Europe and Russia are seen as the most promising destinations.