China's crackdown on crypto intensifies and Bitcoin miners are next
- Bitcoin miners in China suffer a hike in electricity following the government’s clampdown.
- Houbi sees massive BTC outflow as its users grow concerned.
- Roughly 74% of miners express dissatisfaction as they hope to move to a more friendly environment.
It appears that the Chinese government is now taking steps to clamp down on cryptocurrency miners as it creates its digital currency backed by the yuan. Miners say that the high cost of electricity used for their activities might force them to seek alternatives.
China goes after Bitcoin Miners
The digital yuan creation has been in the pipeline as far back as 2014 and has since been set to launch this year. Meanwhile, China has continued to tighten its grip on cryptocurrency trading.
These efforts by the Chinese government and the freezing of Bitcoin miners' bank cards can be tied to the government weeding as much competition as possible against the arrival of its fiat-backed digital currency.
A famous Chinese cryptocurrency journalist, Colin Wu, has reported that 74% of miners surveyed attested to the drastic impact of the hike in electricity tariffs. Some other miners said they had shut down their mining operations for a month as they couldn't continue.
As the Chinese government is cracking down on the exchange of crypto and legal currency, Chinese miners are facing a major problem in paying electricity bills. 74% of the miners surveyed told Wu that the payment of electricity bills has been greatly affected. pic.twitter.com/Sqi8DkP5zb
— Wu Blockchain（Chinese Crypto Reporter） (@WuBlockchain) November 16, 2020
All this build-up has led to the closure of some OTC companies that specialize in serving miners.
Exiting before it's too late
Things don't seem to be looking too bright for exchanges based in China. Bitcoin's outflow from Houbi to Binance recently peaked after its COO allegedly went missing. Investors are growing fearful about whether their funds will be compromised.
On-chain data from CryptoQuant shows that more than 18,650 bitcoin, worth nearly $300 million, were transferred from Huobi to Binance on November 5.
BTC Exchange Outflow by CryptoQuant
Not long before all of these events, the founder of OKEx, Star Xu, was detained by the local police without a clear reason. No official announcement has been made about the arrest, and no charges have been filed, but speculation is mounting about the company's state.
It appears that the Chinese government might be trying to get a grip on the cryptocurrency industry within the nation while it pushes for the use of its own digital yuan. It has yet to be seen where all of these companies may land as they begin to search for a crypto-friendly environment.
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