On Monday, China’s state planning body, the National Development and Reform Commission (NDRC), said it was seeking public opinion on a revised list of activities that it wants to restrict or phase out, including crypto mining. The ban would also include bitcoin.

The proposed move triggered dramatic headlines across the world, in part because a large percentage of the world’s cryptocurrency mining activities take place in China. This means that, if executed, the ban would have a significant impact on cryptocurrencies such as Bitcoin.

Yet the announcement hardly came as a shock to industry participants and watchers as it wasn’t the first time Chinese authorities attempted to banish cryptocurrency and mining activities.

Alex Krüger, an economist and crypto trader, told TechNode that the news about the elimination of crypto mining is overblown.

Dovey Wan, founding partner of Primitive Ventures, said the while the draft does reflect the “official sentiment” of the Chinese government, its actual impact could be minimal given that many businesses that should be phased out according to the 2005 version of the guideline are still around.

She added that crypto mining business is regional in nature, and that local governments’ incentives are not always aligned with the NDRC’s objectives. “This power dynamic plays well to facilitate crypto mining staying vibrant on a local scale,” said Wan.

Michael Zhong, an analyst at Beijing-based TokenInsight, said that he was also not expecting drastic government actions to come out of the revised list.

“The cost to enforce the regulation is high,” said Zhong. “After many clampdowns, most of the mining farms now operate in a somewhat grey area. It would be challenging to implement and enforce the regulations.”

He added that most mining farms had access to cheap electricity, meaning they have access to public resources and has established connections with local governments. The intertwined relationships between mining companies and local governments make it difficult if not impossible to enforce effectively the ban, according to Zhong.

The government had previously announced its intention to clamp down on mining activities. In early 2018, regulators were pondering a withdrawal of special benefits such as tax deductions and cheap electricity supplies to discourage bitcoin mining.

Even though it is uncertain whether regulators will follow through with the claim to eliminate crypto mining activities, mining operators will most likely remain under tight regulatory oversight. During the Two Sessions meeting last month, political leaders called for strict supervision and continuing the ban of cryptocurrency trading, signaling that cryptocurrency and related activities be expected to remain tightly limited in the coming year.

Alessandro Patti, CTO of US-based enterprise services company AGP Solutions, said some of his clients who operate mining farms in China are looking to diversify their operations. Patti is a cryptocurrency miner who provides consulting services to operators who own mining rigs in different countries including China.

Facing of harsher regulatory climate, the big mining firms will likely halt their expansion in China and start diversifying their operation by moving part of it abroad, which could be a boon for other markets that are considered “safer” like the US and Canada, said Patti.

Smaller mining operators that are flying under the radar such as those who have set up rogue mining facilities in major metropolitan areas and siphon off power from the city are the ones that should be concerned, said Patti. In October, the principal and vice principal of a high school in the central Chinese province of Hunan were fired for mining cryptocurrency using school resources and putting a hefty RMB 17,158 (around $2,550) on the school’s electricity bill.

This is not to say that the big players are untouchable. Patti noted that regulators could still prey on the weakness of big miners like Bitmain, which is currently experiencing financial troubles.

In late 2017, authorities started clamping down on crypto activities in the country and announced an outright ban on exchange services. This drove a slew of crypto wallets and trading platforms abroad.

Earlier this year, authorities started enforcing the new blockchain regulations, which aim to keep close tabs on blockchain service providers.

Nicole Jao is a reporter based in Beijing. She’s passionate about emerging trends, news, and stories of human interest within the world of technology. Connect with her on Twitter or via email: nicole.jao.iting@gmail.com.

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