Beijing aims to contain bitcoin boom, but does not ban mining

Business & Technology

With the announcement of curbs on electricity use and, potentially, land-use and tax incentives that favor bitcoin miners, the Chinese government appears eager to discourage cryptocurrency production in China.

It’s no secret that Beijing is skeptical of the bitcoin boom. In September, the central government cracked down on both initial coin offerings and the operation of large virtual currency exchanges. This week also saw the Communist Party’s official paper, the People’s Daily,  publish a commentary (in Chinese) further decrying the currency’s value as “flooded with froth,” and based purely on “speculation.”

So it was believable to many when rumors started flying this week that a full ban on bitcoin was in the works. CoinDesk says that WeChat users were sharing an image purporting to show Guo Hongcai, a “notable and active investor in the bitcoin industry in China,” claiming that there would be a ban, but Guo confirmed from his own account that the image was fake.

Nevertheless, the government appears eager to disincentivize bitcoin production in China, if not going so far as to ban it:

  • Authorities will aim to curb electricity use by bitcoin miners, sources told Bloomberg. Reuters separately reported, “While the People’s Bank of China (PBOC) can’t directly regulate bitcoin miners’ power usage, it can ask local authorities to do so, the central bank told members of the Leading Group of Beijing Internet Financial Risks Remediation at a meeting at the end of 2017,” according to a source.
  • “Land-use policy, taxation and environmental measures” may also be used to “guide” bitcoin miners out of the business, according to a source (paywall) in Caixin.
  • CoinDesk clarifies that the sum of these reports, rather than a ban, appears to be that “the government’s current stance on bitcoin mining is to neither encourage nor hamper” the practice.

Also in cryptocurrency news, from TechNode: Shares of Renren—China’s forgotten social network—just jumped after ICO announcement