The central bank held a closed-door meeting to discuss power restrictions on Bitcoin mines, not closures

In response to market rumors on January 3 that the central bank held a closed-door meeting and required the closure of Bitcoin mines within a time limit, Tencent Frontline learned from an insider that the closed-door meeting held by the central bank did not require the closure of all Bitcoin mines, but to rectify some mines with irregular electricity use. A Sichuan Bitcoin mine owner revealed that the local government is currently conducting an investigation and requiring industrial and commercial registration, while also regulating electricity use.

"Mining" is a jargon in the Bitcoin world, specifically referring to using the computing power of chips to continuously perform "hash collisions" in the blocks generated by the Bitcoin system to win the right to record accounts and thus obtain Bitcoins rewarded by the system. This process is figuratively called "mining" in the Bitcoin industry.

The biggest expense in the mining process is the initial investment in mining machines and the huge amount of electricity consumed by the daily operation of mining machines. In order to reduce production costs, most Bitcoin mines are located near electricity. Benefiting from the abundant electricity resources in Inner Mongolia and Sichuan, China has the largest number of Bitcoin mines in the world and has a monopoly on Bitcoin production.

Some of these mines have electricity contracts with local power companies, while others use abundant hydropower resources in Sichuan, Yunnan and other places. A Bitcoin mine owner said,

Bitcoin has saved these "wasted waters". The water that was originally supposed to be released from the hydroelectric power station is now used to supply electricity to Bitcoin mining farms. The hydroelectric power station earns huge profits, while the miners get the cheap electricity they have always dreamed of.

Although the Chinese government has ordered the closure of domestic Bitcoin exchanges, the majority of the hashpower that currently dominates the Bitcoin network is still located in China. In fact, 77.7% of the global Bitcoin network hashrate is still in China . Therefore, the Chinese government can currently render the Bitcoin network effectively useless.

Moreover, the manufacturers of a large number of specialized hardware equipment required for Bitcoin mining machines are all in China. On the first day of the new year, Coindesk listed Bitmain's Wu Jihan as the tenth among the top ten blockchain figures of 2017.