A move to ban cryptocurrency mining in China could have a significant impact on bitcoin values if the proposal gets the green light.
Cryptocurrency mining, where people use high-performance computers to solve the complex problems in the bitcoin network to unlock more virtual coins, came under fire from the Chinese government last week due to its environmental impact, Forbes reports.
The mining process “requires huge amounts of electricity”, so digital currency miners have been drawn to coal-dependent provinces due to the cost of power being significantly lower than in more urban areas, the website says.
The activity alone is believed to generate between three and 15 tons (2.7 to 13.5 metric tonnes) of carbon dioxide a year, adds Forbes.
The move will be welcomed by environmentalists, who have protested at bitcoin mining’s “wasteful energy consumption”, says TechCrunch.
There are, however, fears it could send bitcoin values into free fall.
Matt Hawkins, head of mining software firm Cudo Miner, told The Independent that China’s proposed crackdown on mining “could have a substantial impact on bitcoin’s global infrastructure”.
He argues that bitcoin’s network performance “will be harmed” given how active the mining community is in the region.
However, Mati Cgreenspan, a market analyst at the online trading platform eToro, told the news site that the ban “is more likely to push bitcoin prices up than down”.
“The loss of cheap Chinese electricity would raise the mining cost, which is net positive on price”, he said.
The Chinese government has yet to announce when it will decide on the cryptocurrency mining ban.
What is today’s bitcoin price?
Bitcoin values saw slight declines over the past week, with prices falling from highs of $5,420 (£4,130) on Wednesday to a low of $4,980 (£3,800) on Friday, according to ranking site CoinMarketCap.
Values crept up over the weekend, though, with today’s price coming in at $5,170 (£3,950) per coin, the site reports.