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Why Did China Ban Bitcoin Mining? Right here Are The Seven Main Theories


One in every of 2021’s largest tales was the China ban on Bitcoin mining. On one hand, the information affected Bitcoin’s worth and gave ammunition to the nay-sayers that assume that governments will outlaw Bitcoin. On the opposite, the community saved working with out a hiccup, recovered its hashrate in file time, and gained in decentralization. Nevertheless, a query remained. Why did China exclude itself from this very profitable exercise during which they had been dominating?

As Bitcoin entrepreneur John Carvalho not-so-eloquently put it, “I refuse to consider that China is silly.” There must be a cause, even when it’s a easy one. To assist our viewers remedy the puzzle, NewsBTC determined to collect all of our theories in a single put up.

China Ban Principle #1:  The Digital Yuan CBDC

This one is as easy because it will get. When China began cracking down on miners, NewsBTC reported: “As for the attainable causes, Bitcoin Journal’s Lucas Nuzzi cites the upcoming Digital Yuan CBDC.” And Nuzzi stated, “They’re actually rolling out their very own coin (a CBDC) that can allow the mass surveillance and unbanking of dissidents.”

So, did China kill a possible billion-dollar business simply to squash their CBDC’s competitors? Is that it?

China Ban Principle #2:  Blackouts

Is China having power points? In that very same article, we posed one other principle:

“On reflection, we must always’ve seen it coming. Solely two months in the past, following a suspicious blackout, NewsBTC reported:

In accordance with the Beijing Financial and Info Bureau, there have been considerations concerning the power consumption associated to those actions. PengPai quotes Yu Jianing, rotating Chairman of the Blockchain Particular Committee of China, to assert that the nation’s environmental necessities might result in crypto mining being extra “strictly regulated”. Jianing stated this can be “inevitable.”

Nevertheless, would they be decommissioning small hydropower stations if this was the case?

China Ban Principle #3:  Cleaner Vitality Sources

Our report on small hydropower stations’ supply was government-regulated media, so take it with a grain of salt. It begins with a declare that clashes closely with principle #2:

“In accordance with the article, the heyday of personal energy vegetation in China was the start of the century. Buyers constructed hundreds of hydropower stations as a result of they noticed them as a continuing money cow. For his or her half, the areas close by noticed them as an indication of progress and an answer to their power issues. 

Nevertheless, with the gradual surplus of electrical energy in China lately, the electrical energy generated by hydropower stations is usually destined to being deserted (generally often called “abandonment of electrical energy”)”

Nevertheless, the primary cause for the decommissioning appeared to be repairing the unique stream of the rivers. “Hydropower stations have at all times been one of many vital components limiting the ecology of Sichuan’s rivers,” stated Wang Hua, deputy director of the Sichuan Provincial Water Assets Division. We went a step additional:

“It’s attainable that the federal government is attempting to do away with these vegetation. That will clarify the article’s tone, it looks as if it was attempting to get buyers to steer clear of these hydropower stations. In gentle of this, China’s ban on Bitcoin mining might simply be a part of an excellent larger play. They’re severe and methodically shaking issues up over there. 

What could possibly be their end-game? Is China simply attempting to go carbon impartial and restore the unique stream of the rivers? Or is there one thing else at play right here?”

Nevertheless, one thing doesn’t add up. In one other article concerning the ban, we highlighted that hydropower power is clear power.

“Did China make the error of a lifetime by banning Bitcoin mining or have they got a secret plan?

The truth that the electrical energy for crypto mining in Sichuan got here from clear hydropower meant that many thought the province can be a secure haven for Bitcoin miners.”

China Ban Principle #4:  The New China Mannequin

We explored Bloomberg’s principle a few “much less founder-driven and extra China-centric” mannequin that China was supposedly exploring.

“If China is abandoning the Silicon Valley mannequin, what is going to it exchange it with? Insiders recommend it will likely be much less founder-driven and extra China-centric.

Why is China dwarfing its largest industries and gamers? Is the “China Mannequin” simply involved with scale? Or is management their focus? Are they cracking down on folks and firms with an excessive amount of energy that work on a worldwide scale?”

And regardless that it wasn’t fairly plausible, it launched the idea that China was additionally cracking down on their largest tech executives. Perhaps this isn’t solely about Bitcoin?

BTC worth chart on Bitbay | Supply: BTC/USD on TradingView.com

China Ban Principle #5:  Making Bitcoin Laborious To Use

This one doesn’t clarify the overarching theme of the China ban. It does add shade to no matter principle you favor. In an occasion, Yin Youping, Deputy Director of the Monetary Shopper Rights Safety Bureau of the Individuals’s Financial institution of China, stated, “We remind the folks as soon as once more that digital currencies comparable to Bitcoin should not authorized tender and haven’t any precise worth help.” And proceeded to checklist the whole lot the PBOC was doing to fight cryptocurrency buying and selling.

Within the NewsBTC report about it, we stated:

“Perhaps their plan is easier than we thought. It’s attainable that The Individuals’s Financial institution of China is simply going to make it actually actually onerous for the frequent citizen to entry Bitcoin. And, China’ll use propaganda and repetition to maintain folks in examine and terrified of the unknown. One in every of Bitcoin’s prototipical adversarial situations. A battle that Bitcoin anticipated ultimately.”

China Ban Principle #6: Making ready For Evergrande’s Default

Was the Chinese language authorities simply closing the exits? They knew that the Evergrande scenario was inevitable and didn’t need folks to have the Bitcoin lifeboat obtainable. In our report, we stated:

“To recap: the federal government noticed this coming from a distance. They knew the disaster was going to repeatedly hit the nation and banned Bitcoin mining to scare the inhabitants into not shopping for the toughest asset ever created. Bitcoin, the true hedge in opposition to the collapse of each financial system.”

China Ban Principle #7: FUD To Get Extra Bitcoin

In accordance with John Carvalho’s wild and stuffed with assumptions principle, China bans one thing associated to Bitcoin each cycle to govern the value and get extra BTC. The nation has no incentive to ban the business. They make an excessive amount of cash mining, plus they management the ASICs producers, plus mining machines inflate the worth of chips, they usually management that enterprise too. So, Carvalho’s principle is:

“The primary ASIC producer, the Chinese language firm Bitmain, had a brand new era of miners prepared. So, the CCP “determined to create a requirement for the aftermaket and mix it with the FUD.” As they often do, they bought their Bitcoin and made their shorts. Then, China banned Bitcoin mining and the entire nation turned off the ASICs. The world perceived the ban as actual, simply “have a look at the hashrate.” That is the primary time this occurs. Then, China bought a small portion of its ASICs to the USA.”

In accordance with him, Bitcoin mining in China didn’t cease, they’re simply not signing the blocks. After all, he doesn’t have any proof, and neither can we. That is only a principle, like all of the others.

What’s actually occurring in China? What’s the rationale behind the good China ban of 2021? We wouldn’t know for certain, however we’ve got many suspicions. Let’s hope 2022 provides us strong proof, new insights, or, not less than, a believable rationalization.

Featured Picture by PublicDomainPictures on Pixabay | Charts by TradingView



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