China tightens restrictions on Bitcoin; large-scale mining operations likely to be targetted

It is no secret that China is one of the world's largest mining hubs. An estimated 65-75% of all the world's Bitcoin is mined in China, which comes at a tremendous energy cost. The Chinese Government is no stranger to this and has kept an eye on mining operations since Bitcoin started gaining traction in 2013. Given their massive scale, banning them outright could lead to unforeseen consequences worldwide. Therefore, the Government is taking a classic 'frog in the pot' approach to rid the country of Bitcoin.

The Chinese Government has further tightened restrictions (via SCMP) on cryptocurrency farming operations located within the country. Chinese Vice Premier Liu He said that the Government would "crack down on Bitcoin mining and trading behaviour". While this doesn't detail any specific actions, mining/buying/selling cryptocurrencies in China could get a whole lot harder in the coming weeks.

The Chinese Government has already instructed financial institutions to stay away from cryptocurrencies. Now, it could come for exchanges located within the Chinese borders. This could trigger a mass exodus for large-scale mining firms, which will very likely seek refuge in neighbouring countries with lesser regulations and cheaper electricity. Global Bitcoin prices could take a tumble, too. It'll be interesting to see if the said regulations affect more eco-friendly cryptocurrencies such as Chia, which use significantly lesser energy than Bitcoin.

China's crackdown on cryptocurrencies will likely affect Ethereum prices, too, which is single-handedly responsible for the world's GPU shortage. While miners could eventually switch to ASICs like the Bitmain Antminer E9, gaming graphics cards are still highly sought after. Furthermore, Ethereum's founders have confirmed that the cryptocurrency will move away from its energy-intensive 'proof of work' model to a new 'proof of stake' model soon.