The regime of China's Sichuan province moves to stamp out Bitcoin (BTC) mining activity, citing that growing cryptocurrency prices have led to the escalation of illegal activity under the guise of mining.

Sichuan — 10% of the global hashrate

According to estimates from Cambridge University, Sichuan is responsible for almost ten% of the global hashrate. In fact, this single Chinese province mines more Bitcoins than the entirety of the U.S. or Russia.

China: Bitcoin Mining Map. Source: Cambridge University.

China: Bitcoin Mining Map. Source: Cambridge University.

Apparently, Sichuan was previously trying to attract the miners in club to combat the economic downturn and employment brought nigh by the COVID-19 pandemic. Instead, allegedly, "illegal fundraising" and multi-level-marketing schemes flourished.

What's adjacent?

It'due south not clear whether these recent issues volition in consequence stamp out mining in Sichuan. China's crypto customs has been flourishing despite governmental constraints. As Christopher Bendiksen, head of research at CoinShares, told Cointelegraph:

"I don't think Bitcoin miners in People's republic of china take ever been, you know, quote unquote, comfortable. If what you mean is that they feel safe and certain about their right of ownership. And, you know, the thought that the regime merely won't show up one mean solar day and accept all the stuff. I really doubtfulness that they've ever felt comfortable with that. Now, information technology's probably worse than ever."

Still, what would happen if this fourth dimension around, the authorities took their directives seriously and moved with full force to stamp out all the Bitcoin mining in Sichuan? Who would option the slack?

Going West?

Philip Salter, head of operations at Genesis Mining, the company that emphasizes that it does non practice any mining in China, told Cointelgeraph:

"The affair with China is that Communist china has inexpensive production costs, the CapEx is very low. Everything is cheap and fast in China. But the operating costs are <...> not so low considering most of the country'south fueled by coal and coal is the most expensive energy source. So really, the operating costs are not so adept in China."

Probably, the more profitable and stable miners would exist able to motion their equipment to other Chinese provinces. It could also add burn to the latest pro-Western tendency in the industry. Even China'due south giant Bitmain has been operating a l megawatt farm in Texas. Bitcoin mining in Texas has been burgeoning thank you to the low electricity prices and friendly local officials.

With the halving already putting a lot of pressure on miners, leading to the reduced hashrate, this latest stress test will probe Bitcoin'south resilience in one case again.