Chinese miners forced to stop operations due to lack of regulations in Sichuan

Coin mining in southwestern China is one of the most profitable economic activities in the Sichuan region, but local mining companies have reportedly been forced to cease operations and relocate, apparently due to lack of legislation on the activity of mining of digital coins in the region.

The order - of indefinite character - was dictated by governmental authorities of the province, the third more populated of China. In this regard, a local official said that the regulation plans a new challenge, because since the central government has not introduced any economic policy on the issue, local governments have no legislation to act.

We must also put into perspective why Sichuan is such an important mining center, considering that this region has aroused the interest of investors and entrepreneurs for the hydrographic wealth of the sector. This natural quality makes it an abundant and potential producer of hydroelectric source energy, being the most economical. In the mining business, cheap energy translates into less investment for more bitcoins.

In addition, we must take into account the moment of the Bitcoin ecosystem in which this situation occurs. Bitcoin has nearly tripled its price in the first half of 2017, and this partial halt of state-owned mining companies has only brought the loss of hundreds of thousands of dollars.

The increase in the price of bitcoin is partly related to the Chinese government's decision to allow the withdrawal and deposit of fiduciary coins in China's main exchange houses: OkChain and Huobi.

There is also a consensus on the fact that there is no significant relationship between mining and the financial risks associated with the bitcoin market. For this reason, the suspension of activities and subsequent relocation of the miners should not be related to the legal vacuum evidenced in China, where the Central Bank will issue a regulation that does not respond to the growing mining industry, but to the use of bitcoin for financing, the Exchange and anti-money laundering measures.