In China, almost two-thirds of all Bitcoins on the market worldwide are mined. As the government has its own plans, cryptocurrency trading is slowly being banned.
China is the world's largest producer of Bitcoins. Companies such as Bitmain or MicroBT have been able to establish themselves there mainly because of the low energy prices and the cheap hardware. Last year, 65 percent of Bitcoins were mined in China. In the north, coal and wind power serve as cheap energy sources, in the south, hydroelectric power. The hardware is produced cheaply locally, because China is the world's most important manufacturer of computer technology.
Central bank plans own currency
But the Chinese government has its own plans. This has become clear time and again in the past when Bitcoin companies were simply cut off electricity. There are several reasons for this, but one of the main reasons is that the cryptocurrency has been used again and again to circumvent capital export rules.
Now the central bank is working on its own digital currency called CBDC: "Central bank digital currencies". However, this is not a cryptocurrency because it is not based on the so-called blockchain technology.
According to the former president of the State Bank of China Li Lihui, the Chinese market is too big for cryptocurrencies and the planned Chinese digital currency is much more reliable and secure than Bitcoin and Co.
Insight into the finances
Since the Chinese central bank will distribute the money, they have direct insight into the customers' financial data. This means that the new money will hardly differ from the current payment methods. The idea has already been tested in everyday life, but the results are not yet clear.
The plan is to introduce the new CBDC currency nationwide by the end of 2021. Until then, Bitcoin mining will continue to be tolerated. Nevertheless, Bitcoin producers are slowly turning away from China: In Central Asian states like Kazakhstan, Bitcoin production is even cheaper.
