China scraps plan to phase out its Bitcoin mining industry

The China National Development and Reform Commission (NDRC) appeared to scrap its plan to eliminate Bitcoin ($BTC) mining within the country just six months after its proposal. The final version of the economic planning agency’s new Catalog for Guiding Industry Restructuring, set to take effect at the start of next year, no longer lists Bitcoin or other cryptocurrency mining under industries to be phased out of China. This news comes on the heels of President Xi’s pro-blockchain comments, which urged China to invest in and accelerate blockchain development.

Why it matters:

• The reversal insinuates President Xi’s comments had a notable impact on the outlook of cryptocurrencies within China. What remains to be seen is whether China carries its newfound interest in blockchain over to cryptocurrency exchanges, which were banned back in 2017.
• Some research estimates that China accounts for up to 70% of the hashing power dedicated to Bitcoin mining, with the majority of activity in a single province (Sichuan). The plan to eliminate mining from China would have pushed efforts to alternative locations, possibly increasing the distribution of Bitcoin’s hashing power. This 180 from the NDRC could continue to concentrate mining activity within China and increase doubts related to Bitcoin’s level of mining decentralization.