Bitcoin Mining Is Still Happening in China
Contrary to belief, China has not banned bitcoin mining, according to a local power provider that came forward this week.
Clearing the Air
One of China’s state-run power grids has rebuffed rumors that cryptocurrency mining is illegal in the country. The rebuke came after Sichuan Electric Power Company ran a story indicating that China’s State Grid was about to ban bitcoin mining entirely in Sichuan province. The claims were based on a circulated document stating that “bitcoin mining is an illegal activity”
Although local executives admitted the report to be at least partially true, they clarified that it was an internal document that had little bearing on statewide regulation.
As CCN reports, it was trusted Chinese news source CnLedger that cleared up the rumors by issuing the following statement regarding Sichuan Electric Power Company:
“The head of that company has clarified that they made mistakes on the statement, as they are not a government administrative department, and have no rights to determine whether bitcoin mining is illegal.”
In a separate statement, state-owned business publication Caixin indicated that the government has no intention to ban crypto mining in the region. This is a crucial admission, given the evolving nature of bitcoin regulation in the world’s second-largest economy.
The Return of Regulatory Sanity?
China shocked the cryptocurrency market a few months ago by instating a blanket ban on all bitcoin trading within the country. Policymakers also moved to ban initial coin offerings (ICOs), the controversial crowdfunding model that has raised billions of dollars this year alone.
However, there is some evidence to suggest that the Chinese are pursuing a more comprehensive overhaul of bitcoin regulation. Last month, the director of the central bank’s Digital Currency Research Institute pitched the idea of a state-run cryptocurrency as a means to stabilize the yuan.
In a meeting hosted by the International Telecommunication Union in October, Yao Qian issued the following statement:
“The value of cryptocurrencies such as bitcoin primarily comes from the market speculation. It will be a disaster to recoganize it as a real currency. And the lack of a value anchoring inherently determines that bitcoin can never be a real one.”
Speculation that China may soon re-enter the cryptocurrency market helped bitcoin prices stabilize during the month of October. The market hasn’t needed any help since, with prices soaring to new record highs.
Several countries have taken China’s lead in banning certain activities related to cryptocurrency. Vietnam banned bitcoin trading last month without giving much of a reason. Even South Korea, which is home to one of the more liberal crypto environments, recently issued a ban on ICOs.
Although Chinese regulations are expected to evolve now that the Communist Party gathering has come and gone, traders have already found ways to circumnavigate the ban by moving their business to Hong Kong and other regional markets with more favorable crypto regulations.
Disclaimer: The writer owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.