Why China wants to ban Bitcoin and other cryptocurrencies

Created in 2009 by the mysterious Satoshi Nakamoto, Bitcoin had its first successes in 2017, after having passed the $1,000 mark and then by reaching the $20,000 mark at the end of the same year. After a good year and half of bear market, at the beginning of April 2019, it once again created the buzz online, with a value of more than $5,000.

Only five countries have banned bitcoin mining worldwide.

Bangladesh, Bolivia, Ecuador, Kyrgyzstan, and Nepal. According to a report published on 9 April 2019, China is preparing to join this short list. Mining is part of a list of 450 industrial activities banned published by the National Development and Reform Commission (CNDR). All would have the same thing in common, the waste of resources or pollution caused by these activities considered unsafe by the Chinese authorities.

Bitcoin and other cryptocurrencies consume a large amount of electricity.

Because of the complex calculations it requires, each Bitcoin transaction requires about 215 kWh of energy, more than the consumption of a the average Chinese household for two weeks. In China, the public consultation on this subject remains open until 7 May. The country had already taken measures to this end in 2017, banning virtual currency swaps as well as ICOs (Initial Coin Offering), fundraising that can be exchanged for cryptocurrencies.

The kilowatt-hour is the miner’s obsession

These are surprising decisions, considering that 58% of the world’s mining farms are located in China. It is difficult to believe China’s environmentalist ambitions in this area since the majority of the energy used in China for Bitcoin already comes from renewable energy sources.

Ghost towns, located near such dams, were even repopulated by miners, seizing the opportunity to mine at a lower cost.

A way to protect the Yuan?

This move allows the country to protect and to preserve the exchange rate of its national currency, the Yuan. According to experts, other states that have chosen to ban cryptocurrencies are most concerned about capital flight.

In China, the chosen decline in leadership has already begun. Recently, the authorities have raised its electricity prices, which has forced many miners to flee. It was too expensive, and they could no longer make their business profitable. Many have moved elsewhere, to Kazakhstan, Canada or Ukraine, where they have been able to set up near hydraulic dams. In any case, it is all great news for cryptocurrencies, which will be able to decentralize. The Chinese government will have less control over Bitcoin.