China does not prohibit crypto-mining
网民 币 stands for Wangmimbi – “The Currency of Net Residents”
Actually, China intended to completely ban the cryptocurrency mining. This plan has now been dropped. We speculate why.
In April of this year, the news circulated that China will ban crypto-mining. This month, the State Development and Reform Commission has come forward with a proposal for a list of which industries should be promoted, limited or eliminated. The list should replace the 620 original releases. The cryptocurrency mining appeared in her as an industry that needs to be eradicated without delay. The reason given was above all the ecological damage and the waste of energy resources.
Now it seems that the Chinese government has changed its point of view. The Commission has now submitted the final version of the list. In this the mining no longer appears. The proposed prohibition of radicals will therefore not exist; China will continue to be the top location for crypto-mining.
What caused the change of mind of the government? It might well fit in with the general trend that the Chinese government is opening itself up for blockchains and, to some extent, for cryptocurrencies. However, the government is more in the sense of “blockchain technologies” in the sense of mass surveillance, for example, or the creation of its own cryptocurrency. That this is accompanied by an opening to free cryptocurrencies raises at least questions.
It may be that the government has realized that mining can be an important industry for China. Manufacturers of Asic miners are making huge sums by exporting them all over the world; even the big mining farms in China are doing good business, while they are shedding excess green energy in about Sichuan. In the end, it’s tax revenues and high-tech jobs that the government is reluctant to do without.
At the same time, a ban on mining would also mean that the government loses the opportunity to influence. If the mining industry is legal, the government can regulate it; it can ensure that miners mine only or mainly through renewable energy sources. It can also have some impact on cryptocurrency ecosystems through mining, and even control them with appropriate shares of hash power. It would not be surprising if, in the future, the government uses punishments and rewards to ensure that the large mining pools are all in government-friendly hands.
With this, China has recognized something that is not yet clear about whether Europe has already grasped it: the mining of cryptocurrencies could be an essential part of future finance; the huge farms full of Asics can become centers of global financial flows, and the land they control will gain tremendous economic – and possibly political – advantage.