China Bans Crypto Mining

Even though China mines over 8% of the world's bitcoin, the CCP has regulated the use of cryptocurrency so much so that it is not considered legal tender for retail payments and the Chinese banking system does not accept it.  Nevertheless, the very profitable mining of bitcoin has spread throughout China with particular focus in the Mongolia region.  

With the stated goal of reducing China's carbon footprint, this week China's Inner Mongolia region announced a ban on all new crypto mining and indicated that they intend to shut down existing operations.  Mining cryptocurrency does indeed consume heaps of energy.  For this reason, China declared that it intends to reduce mining and/or make it illegal so that the country can consume less energy.  

Is that the real reason?  Knowing that China has not only developed its own cryptocurrency run by the state, and knowing that China does not desire its denizens to have free access to cryptocurrency...could this signal a direct attack by China on the crypto market?  It appears so.  

The impact of this decision is yet to be determined.  Some speculate that it will free up more blocks of currency for miners in other regions of the world.  Others speculate the decision will have a detrimental impact on the price of Bitcoin.  Either way, it does appear that China is intent on cracking down on a currency that it sees as a threat to its fiat currency the yuan.  

At the polar opposite of China's attack on cryptocurrency, one state in the US just announced its desire to encourage more crypto-miners to dwell in its region.  This week, Kentucky announced proposed legislation that would give significant tax breaks for crypto-miners.

Kentucky Welcomes Crypto-Miners!

Yesterday, the Kentucky House of Representatives approved a measure by a 19-2 vote that would provide tax breaks for crypto-miners.  The measure would remove sales tax obligations from electricity usage for those in the crypto-mining business.  The bill seeks to encourage more investment in the state, and it sees the benefits of encouraging crypto-miners to move to the state because the money they make from mining would be a source of income that could bring economic development to the entire state.

Some lawmakers expressed concern because mining cryptocurrency does indeed consume a large amount of electricity.  They therefore fear that this could overextend the electric grid and drive up the costs of energy for all.

But these naysayers are in the minority.  Kentucky sees the value of investment in its state, and the potential upside of encouraging crypto-mining could lead to significant revenue for more infrastructure state-wide.

I don't know about you, but I'm thinking of moving to Kentucky!