China quietly orders its bitcoin miners to cease operations, widening clampdown, say reports

China has already shut exchanges for the trading of cryptocurrencies and banned initial coin offerings. PHOTO: REUTERS

SINGAPORE - Chinese authorities have ordered its army of bitcoin miners to quit operations, clamping down on a group estimated to produce some three-quarters of the world's supply of the cryptocurrency, according to reports in the Wall Street Journal and a handful of tech portals.

China has already shut exchanges for the trading of cryptocurrencies and banned initial coin offerings.

In bitcoin-mad South Korea, the largest cryptocurrency exchanges were raided by police and tax agencies this week for alleged tax evasion, Reuters reported on Thursday.

In China, a leaked Jan 2 memo from the "Leading Group of Internet Financial Risks Remediation" - the country's internet finance regulator which initiated the clampdown on bitcoin - said bitcoin miners should make an "orderly exit" from China because they have consumed "huge amounts of resources and stoked speculation of 'virtual currencies", the TechCrunch website reported.

Details of the memo were posted on Twitter by Chinese blockchain industry executive Elly Zhang and confirmed by news website Quartz, said TechCrunch.

It said the group itself doesn't control national energy usage but it is an influential political vehicle that's led by the deputy governor of the People's Bank of China (PBOC), Pan Gongsheng. To remove miners, the group asked its local offices to look into policies around price, tax, land usage and environmental concerns, said TechCrunch.

Its local representatives must report back on their progress of removing miners in their region on a monthly basis, it added, quoting an earlier report by Quartz.

Bloomberg and Reuters last week reported on the PBOC's plans to slowly cut down on the number of miners by dissolving any such agreements and deals that had previously been struck.

In cryptocurrency mining, miners solve complex mathematical puzzles with computers in order to be awarded the virtual coins.

Reading the tea-leaves, China's bitcoin mining giants have begin setting up overseas in countries like Iceland, Canada and the US. Reuters reported on Wednesday that Bitmain Technologies is expanding to Switzerland, having registered a subsidiary in late December in the Swiss canton of Zug.

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