China’s newest Bitcoin crackdown sees exchanges censored, miners going offline
Major internet service companies in China, including Baidu and Weibo, are censoring keywords related to Bitcoin exchanges, as confirmed by Bitcoin Magazine.
At the time of writing, Google-like Baidu and Twitter-like Weibo both skip search results and effectively censor certain keywords related to bitcoin exchanges. Although personal profiles of Chinese cryptocurrency opinion leaders, such as Binance founder Changpeng Zhao, are still available on Weibo, both services do not show any search results when searching for the Bitcoin exchanges Binance, OKEx and Huobi.
The censorship follows a statement by the Chinese State Council that the government will “take action against Bitcoin mining and trading behavior and resolutely prevent the transfer of individual risks to society.”
For example, on Weibo, when searching for Binance, a message is displayed that reads: “In accordance with applicable laws, regulations and guidelines, search results from ‘Binance’ will not be displayed.” And when I search for OKEx on Baidu, the website says, “Baidu found 0 similar results for you. Sorry, no pages related to ‘okex’ were found.”
As confirmed by Bitcoin Magazine, the pattern repeats itself when searching for Binance, OKEx and Huobi on both platforms.
Bitcoin miners have ordered that they go offline
The Chinese State Council’s statement last month calling for crackdown on bitcoin mining and trading also poses a threat to some of the largest bitcoin mining establishments in the country and the world.
According to a report by The Block, one of the key economic and technological development zones in China’s Xinjiang Province has received a notice demanding that the area immediately shut down all bitcoin mining operations.
“The Changji Hui Autonomous Prefecture Reform and Development Commission in Xinjiang issued a notice to its subordinate government officials in the Zhundong Economic Technological Development Park on Wednesday,” the report said. “According to the announcement, development park officials have been ordered to cease all crypto mining activities under their management at 2:00 p.m. Chinese time on Wednesday.”
The park is home to some of the largest Bitcoin mining facilities in China, all of which run on fossil fuels. It is also home to various coal-producing industries, including industrial factories and coal-fired power plants.
The instruction follows recent comments from Bitcoin mining rig maker Canaan, who spoke out against China’s regulatory action against the industry. Company officials argued that the sector is reducing energy waste, creating jobs and fueling the local economy – apparently to no avail.
How will Bitcoin react?
While it is difficult to determine how much of Bitcoin’s hash rate is currently being fed by Changji Prefecture’s fossil fuel power plants, Zhundong Park has undeniably emerged as a bitcoin mining hub.
Therefore, closing all bitcoin mining operations in the park could affect the hash rate of the bitcoin network. Currently, at around 155 exahashes per second, the network’s hash rate has been relatively stable over the past few weeks, according to Glassnode data, increasing by almost 50% in a year.
The exact impact on the Bitcoin hash rate is difficult to predict. However, the network’s hash rate may drop in the short term as miners are forced to relocate their operations out of Xinjiang. Additionally, China’s recent regulatory crackdown on Bitcoin mining and related financial institutions could provide an incentive for miners to leave the country entirely – a trend that had already begun.
Although Bitcoin’s hash rate can suffer in the short term, it will recover in the medium to long term when the miners move. In addition, reducing the hash rate does not negatively affect the security of the network, as explained in a video by Coin Metrics’ Nic Carter speaking out on China’s mining bans. Carter also highlighted that forcing bitcoin mining from China would reduce bitcoin’s carbon footprint as miners move to more environmentally friendly power plants overseas.