China considers ban on Bitcoin mining as economic policy

The Chinese government's economic planning agency has recommended a ban on cryptocurrency mining, which wastes a considerable amount of electricity.

Cryptocurrency mining has been a lucrative business for some, with Bitcoin jumping in value from a few hundred US dollars in 2016 to a peak of over $19,000 US in December 2017. Though the price has since crashed and has now climbing back up, individuals and companies around the world have been building extensive crytocurrency mining farms.

The technology behind bitcoin is blockchain, a cryptographic ledger system that records transactions in a kind of distributed database among millions of users. New bitcoins are discovered by mining software that performs millions of cryptographic hashing calculations per second, with each bitcoin being a new solution to the cryptographic puzzle. The software generates millions of guesses and tests each one to see if it's a valid solution.

This system is designed to be inefficient, requiring considerable computation work to create new bitcoins to that the flow of new coins into the virtual economy is limited to a steady pace. This unfortunately means that bitcoin mining consumes a lot of electricity, a situation that isn't helped by the fact that companies set up huge bitcoin farms with massive racks full of graphics cards or ASIC miners running 24 hours per day.

China has a history of regulating problematic industries, and this isn't the first time it's clamped down on cryptocurrencies. The Chinese government previously closed down cryptocurrency exchanges and banned Initial Coin Offering schemes back in 2017, and has produced reports indicating that cryptocurrency mining is making a significant impact on global warming. The country has also previously shut down bitcoin mines that were affecting the stability of the local power grid.

Source: BBC News