China’s Friday notice on intensifying a nationwide clampdown on cryptocurrency mining has dealt a crippling blow to the sector, as more industry players scramble to exit. Questions have also emerged over how effective previous province-level crackdowns have been.
Despite earlier clampdowns that led to an exodus of Chinese crypto miners over the last few months, some miners appeared to have remained — and apparently kept plying their trade.
Case in point: Inner Mongolia, one of the first regions in China to ban all crypto mining this spring, announced that it recently seized 10,100 illegal crypto mining rigs stored at a warehouse in a government-operated small- and midsize-enterprise innovation park, as reported Monday by state-owned Xinhua News Agency.
In addition, Inner Mongolia this month hired a local company to monitor and ferret out remaining mining operations.
The latest Inner Mongolia clampdown comes as China suffers serious power crunches, blamed on shortages of coal supplies and stricter emission standards. Some areas in Northeast China have to implement rationing during peak hours.
Zhiguo He, Fuji Bank and Heller Professor of Finance at the University of Chicago Booth School of Business, told Forkast.News in an interview that Friday’s ban signalled that the implementation of the tight policy was not working as fast as the policymakers were hoping.
“The fact that they are escalating the intensity just shows maybe things were not as good as they thought. So let’s just do it,” he said.
In concert, Chinese tech giant Alibaba said that beginning Oct. 8, it will ban the sales of crypto mining hardware and software used to obtain virtual currencies, as well as tutorials and strategies on how to mine virtual currencies, according to its statement released Monday.
Mining pool Sparkpool, which was ranked second in Ethereum mining hashrate as of Tuesday afternoon Hong Kong time, said on Monday in a statement on its website that it had stopped providing services to new users from mainland China, and it will shut down all its services and operations for existing users, in China or abroad, starting from Thursday evening Asia time, in an effort to be “maximumly compliant with regulatory requirements.”
As a result, over the past 24 hours as of press time, Sparkpool saw a drop of over 12% in real-time Ethereum hashrate, according to data from BTC.com.
More platforms unavailable
Internet users on the mainland are now unable to access the websites of CoinGecko and CoinMarketCap, as tested by Forkast.News. It’s unclear when the sites became unavailable for mainland users.
On top of that, more exchanges are halting services to users in China. BitMart announced Monday that it was banning account registration for mainland China, and it will stop serving all users there starting from Nov. 30 to “comply with local laws and regulations.”
Crypto exchange BiKi has ceased new user registration for those on the mainland on Sunday, it said in a Tuesday statement. It said it will close its deposit function and will only allow its withdrawal function until Nov. 30.
Feixiaohao, a crypto data information platform, said it had terminated services for mainland users today.
These are just a few of a series of platforms that exited the market following the Friday announcements that instructed stronger scrutiny on the crypto industry.
Huobi, for example, stopped registering new customers in mainland China and said it plans to retire all mainland China user accounts by the end of this year.
Another top-20 crypto exchange, which has around 25% to 30% of its users in China, will also pause onboarding new Chinese users, but existing users won’t be affected at this point, a company executive told Forkast.News in an email. The company asked to withhold its name, citing political sensitivities.