A government agency has confirmed to CoinDesk that an autonomous region in China Xinjiang Uyghur, is planning to get rid of all ‘illegal’ bitcoin operations by the end of August.
These rumors have been spreading online over the last weekend following a notice from the Chinese government issued by Xinjiang’s Economic and Information Commission (EIC). In the Notice that leaked some few days ago, this commission has ordered the local utility companies in that region to identify, report and shut down illegal mining activities and operations.
An EIC official confirmed the validity of the leaked notice to CoinDesk claiming that it was drafted by the commission’s unit that is responsible for the region’s utility issues. There were no further claims or comments from the official. EIC is a local government agency that focuses its scope on technological development.
The document from the EIC defines ‘illegal’ bitcoin mining as activities and operations that are not registered with the government as licensed. They are also operations that consume a lot of electricity without any official contract with the responsible utility firms. The notice further says that utility companies within that region have the responsibility and authority to shut down such unlicensed operations. They should also make sure that they report back to the relevant authorities before the beginning of September 2018.
The EIC said that stern action would be taken against the local utility agencies and firms that fail to shut down and report ‘illegal' bitcoin mining operations.
These directives follow a government notice in January, that required Xinjiang’s utility companies to present reports on a regular basis to the relevant authority regarding local bitcoin activities. This directive is part of a wider strategy to eventually guide a proper and orderly exit of such businesses within this region and all over the country.
This directive has so far affected a lot of mining firms within the Xinjiang region. The chief executive of a Canadian blockchain start-up, Scott Meng and who also has a stake on the mining farms within the region told CoinDesk that the directives issued this year have had a significant effect on bitcoin mining operations.
In his statement, the CEO said that he has two partners with 18,000 and 40,000 crypto miners respectively. These partners according to Scott have been asking him to find for a sport in the United States (US) or Canada as alternatives from China. He, however, notes that that would still be a tall task considering that he has to find cheap electricity, and set up the mining farms from scratch.
EIC has been on the bitcoin case since 2017. It is during this year that the agency issued notices to municipal governments asking them to take caution when supporting bitcoin mining companies. The agency asserted that the farms or firms simply consumed a lot of energy in form of electricity yet the contributed nothing to the region’s economy.
These directives and sentiments came just when bitcoin miners were looking for areas with vast land for setting up their farms and also for areas with cost effective electricity. Xinjiang was one of these areas with affordable electricity as well as a vast land. These requirements could vastly boot the miners’ profits.
Companies that had plans to build their operations in this area include Bitmain. In November 2016, this company had plans of building a bitcoin data center in XinJiang. Asked whether they have any firms in this area, the company officials declined to confirm their having any mining farms in the region.