Following a clampdown on Initial Coin Offerings the other week, Chinese authorities have now banned executives of Bitcoin-related companies from leaving the country. The move is being done apparently so that the authorities can shutter services properly without the executives hampering the process. The country’s moves against the cryptocurrency initially cut the value of Bitcoin down to sub $3,500 territory but it has recently climbed to around the $4,000 mark again as of writing.
Li Lin, the founder of one of China’s largest exchanges, Huobi, has been ordered by the state to report to authorities and cooperate with investigations at any time, meaning that he can’t leave the country. The move is particularly worrying because it leaves a big question mark over what will happen to miners; 80% of Bitcoin mining is currently happening out of China. A closure of miners would have a severe impact on the cryptocurrency in the short term.
The government may not even have to use any sort of force against miners in order to make them close down operations. Mining uses significant processing power in order to keep the network chugging along nicely and therefore ramps up the electric bills. If miners in the country can’t trade their earned Bitcoins into fiat in order to pay those bills, mining will become economically unsustainable.