Why Crypto Mining is Ban in Some Countries
Cryptocurrency mining has become illegal in several countries, including Egypt, Russia, China, and Tunisia. The central bank of Russia has recently banned crypto mining, calling it a “Ponzi scheme” and a tool for criminal activity. The news sent cryptocurrency values tumbling.
Crypto mining also affects the power grids in developing countries, causing power cuts in many areas. In Iran, the government has blamed the crypto-mining industry for power outages. And Kosovo recently banned crypto mining after a series of power cuts. The energy crisis in the region is a major reason behind the ban, he noted.
Governments have also expressed concern about the potential threat that cryptocurrency poses to monetary policy. Although crypto coins such as bitcoin and Ethereum are a useful hedge against currency depreciation, they also threaten the ability of central banks to regulate spending, investment, and inflation. As such, governments may not want to see their currency prices fall. However, governments can’t effectively ban cryptocurrencies.
Another reason for a ban on cryptocurrency mining is that it can disrupt financial systems. The PBOC is concerned that the cryptocurrency industry is contributing to capital flight from China, and they want to curb this. This is consistent with China’s common prosperity plan, which aims to prevent the flow of capital abroad. The common prosperity plan also aims to encourage the domestic circulation of people’s wealth. Without this, wealth redistribution would be more difficult.
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