That’s per a draft published this week by the nation’s National Development and Reform Commission (NDRC) that included cryptocurrency mining as being among 450 different types of operations that needed to be eliminated in the country.
The NDRC plans the Chinese economy and reports directly to the State Council, the Chinese Government’s executive branch.
Citizens have until early May to comment on the commission’s proposed list. However, it seems unlikely that public sentiment alone could stem the tide of an industrial reconfiguration. A leading government-backed Chinese news outlet, the Shanghai Securities Times, cast crypto mining’s inclusion in the draft as broadcasting the official NDRC position on the activity.
The development is notable for bitcoin mining in particular, since it’s been estimated that as much as 70 percent of the Bitcoin network’s hash rate presently originates from China. The Chinese mining industry has surged in recent years due to an abundance of cheap energy sources in the country.
The nation’s government previously moved to restrict domestic access to cryptocurrency exchanges back in 2017. The flex sparked speculation in many cryptoverse circles that further crypto crackdowns would be in store there.
A Ban or an Industry Capture?
The NDRC’s draft didn’t set a schedule for when cryptocurrency mining should be ended in China — a dynamic that suggests the associated policy could go live as soon as the initial public commenting period is over.
However, the situation may not be so black and white. In comments to Reuters, Jehan Chu of Hong Kong-based digital asset investors Kenetic said that China may not be ending domestic bitcoin mining abut rather tightening its control over the industry:
“The NDRC’s move is in line overall with China’s desire to control different layers of the rapidly growing crypto industry, and does not yet signal a major shift in policy […] I believe China simply wants to ‘reboot’ the crypto industry into one that they have oversight on, the same approach they took with the Internet.”
For now, only time will tell if Chu is on the money — or rather on the coin — here.
A Ton of Influence: the Chinese “Threat”
A paper published last fall titled “The Looming Threat of China: An Analysis of Chinese Influence on Bitcoin” explored the various ways that the Chinese government could exert pressure on, and even threaten, the Bitcoin network.
In the report, its authors highlighted the goals that Chinese authorities could have in attacking Bitcoin, namely 1) to oppose the ideologies around the digital asset, 2) to enforce laws against financial crimes, 3) to increase its domestic leverage over the blockchain, or 4) to attack foreign economies that are increasingly interacting with BTC.
“An attack can target Bitcoin users, miners, or the entire ecosystem,” the researchers said.
Alas, it’s far from certain yet if the NDRC is seemingly angling against crypto mining on the basis of ideology, for example. But the commission’s latest draft list will undoubtedly re-stir cryptoeconomy stakeholders’ awareness around how much influence China has on Bitcoin.
It’s a reality that should be seriously tackled, the aforementioned researchers concluded:
“We singled out China for analysis because they are the most powerful potential adversary to Bitcoin, and we found that they have a variety of salient motives for attacking the system and a number of mature capabilities, both regulatory and technical, to carry out those attacks. As future work, we suggest an analysis of existing solutions to the specific threats China poses to Bitcoin and the identification and mitigation of gaps in those protections.”