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


Certainly one of 2021’s greatest tales was the China ban on Bitcoin mining. On one hand, the information did have an effect on Bitcoin’s value and gave ammunition to the naysayers that suppose that governments will outlaw Bitcoin. On the opposite, the community saved working and not using a hiccup, recovered its hashrate in report time, and gained in decentralization. Nonetheless, a query stays. Why did China exclude itself from this very profitable exercise wherein they have been dominating?

As Bitcoin entrepreneur John Carvalho not-so-eloquently put it, “I refuse to imagine that China is silly.” There must be a motive, 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 publish.

China Ban Concept #1:  The Digital Yuan CBDC

This one is as simple 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 mentioned, “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 Concept #2:  Blackouts

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

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

In keeping with the Beijing Financial and Info Bureau, there have been considerations concerning the vitality 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 mentioned this might be “inevitable.”

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

China Ban Concept #3:  Cleaner Power 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 idea #2:

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

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

Nonetheless, the principle motive for the decommissioning appeared to be repairing the unique stream of the rivers. “Hydropower stations have all the time been one of many essential components proscribing the ecology of Sichuan’s rivers,” mentioned 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 eliminate these crops. That might 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 critical and methodically shaking issues up over there. 

What might 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?”

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

“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 Concept #4:  The New China Mannequin

We explored Bloomberg’s idea a couple of “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 counsel will probably be much less founder-driven and extra China-centric.

Why is China dwarfing its greatest 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 world scale?”

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

BTCUSD price chart for 01/02/2022 - TradingView

BTC value chart for 01/02/2022 on Bitrex | Supply: BTC/USD on TradingView.com

China Ban Concept #5:  Making Bitcoin Arduous To Use

This one doesn’t clarify the overarching theme of the China ban. It does add shade to no matter idea you like, although. In an occasion, Yin Youping, Deputy Director of the Monetary Shopper Rights Safety Bureau of the Folks’s Financial institution of China, mentioned, “We remind the folks as soon as once more that digital currencies similar to Bitcoin are usually not authorized tender and don’t have any precise worth help.” And proceeded to listing every part the PBOC was doing to fight cryptocurrency buying and selling.

Within the NewsBTC report about it, we mentioned:

“Possibly their plan is easier than we thought. It’s attainable that The Folks’s Financial institution of China is simply going to make it actually actually arduous for the frequent citizen to entry Bitcoin. And, China’ll use propaganda and repetition to maintain folks in verify and petrified of the unknown. Certainly one of Bitcoin’s prototipical adversarial situations. A battle that Bitcoin anticipated ultimately.”

China Ban Concept #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 accessible. In our report, we mentioned:

“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 Concept #7: FUD To Get Extra Bitcoin

In keeping with John Carvalho’s wild and stuffed with assumptions idea, 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, and so they management that enterprise too. So, Carvalho’s idea is:

“The principle ASIC producer, the Chinese language firm Bitmain, had a brand new technology 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 “take 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 keeping 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 will we. That is only a idea, like all of the others.

What’s actually happening in China? What’s the rationale behind the nice China ban of 2021? We wouldn’t know for certain, however we now have many suspicions. Let’s hope 2022 offers us stable proof, new insights, or, at the least, a believable clarification.

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