One of 2021’s greatest tales was the China ban on Bitcoin mining. On one hand, the information affected Bitcoin’s price and gave ammunition to the nay-sayers that suppose that governments will outlaw Bitcoin. On the opposite, the community stored working with out a hiccup, recovered its hashrate in report time, and gained in decentralization. However, a query remained. Why did China exclude itself from this very profitable exercise during which they have been dominating?
As Bitcoin entrepreneur John Carvalho not-so-eloquently put it, “I refuse to believe that China is stupid.” There needs to be a motive, even when it’s a easy one. To assist our viewers resolve the puzzle, NewsBTC determined to collect all of our theories in a single publish.
China Ban Theory #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 possible reasons, Bitcoin Magazine’s Lucas Nuzzi cites the upcoming Digital Yuan CBDC.” And Nuzzi mentioned, “They’re literally rolling out their own coin (a CBDC) that will enable the mass surveillance and unbanking of dissidents.”
1/ The CCP formally banning #Bitcoin ought to come as no shock.
They’re actually rolling out their very own coin (a CBDC) that can allow the mass surveillance and unbanking of dissidents.#Bitcoin is at full odds with that. Dictatorships do not like freedom cash.
— Lucas Nuzzi (@LucasNuzzi) June 21, 2021
So, did China kill a possible billion-dollar business simply to squash their CBDC’s competitors? Is that it?
China Ban Theory #2: Blackouts
Is China having vitality points? In that very same article, we posed one other concept:
“In retrospect, we should always’ve seen it coming. Only two months in the past, following a suspicious blackout, NewsBTC reported:
According to the Beijing Economic and Information Bureau, there have been issues in regards to the vitality consumption associated to those actions. PengPai quotes Yu Jianing, rotating Chairman of the Blockchain Special Committee of China, to assert that the nation’s environmental necessities may result in crypto mining being extra “strictly regulated”. Jianing mentioned this might be “inevitable.”
However, would they be decommissioning small hydropower stations if this was the case?
China Ban Theory #3: Cleaner Energy 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 concept #2:
“According to the article, the heyday of personal energy vegetation in China was the start of the century. Investors constructed 1000’s of hydropower stations as a result of they noticed them as a relentless money cow. For their half, the areas close by noticed them as an indication of progress and an answer to their vitality issues.
However, 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 electricity”)”
However, the primary motive for the decommissioning gave the impression to be repairing the unique move of the rivers. “Hydropower stations have always been one of the important factors restricting the ecology of Sichuan’s rivers,” mentioned Wang Hua, deputy director of the Sichuan Provincial Water Resources Department. We went a step additional:
“It’s potential that the federal government is attempting to do away with these vegetation. That would clarify the article’s tone, it looks like it was attempting to get traders to steer clear of these hydropower stations. In mild of this, China’s ban on Bitcoin mining may simply be a part of a good greater play. They’re critical 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 move of the rivers? Or is there one thing else at play right here?”
However, one thing doesn’t add up. In one other article in regards to 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 undeniable fact that the electrical energy for crypto mining in Sichuan got here from clear hydropower meant that many thought the province could be a protected haven for Bitcoin miners.”
China Ban Theory #4: The New China Model
We explored Bloomberg’s concept a couple of “less founder-driven and more China-centric” mannequin that China was supposedly exploring.
“If China is abandoning the Silicon Valley mannequin, what’s going to it exchange it with? Insiders recommend it is going to be much less founder-driven and extra China-centric.
Why is China dwarfing its greatest industries and gamers? Is the “China Model” simply involved with scale? Or is management their focus? Are they cracking down on folks and corporations 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 greatest tech executives. Maybe this isn’t solely about Bitcoin?
BTC price chart on Bitbay | Source: BTC/USD on TradingView.com
China Ban Theory #5: Making Bitcoin Hard To Use
This one doesn’t clarify the overarching theme of the China ban. It does add shade to no matter concept you like. In an occasion, Yin Youping, Deputy Director of the Financial Consumer Rights Protection Bureau of the People’s Bank of China, mentioned, “We remind the people once again that virtual currencies such as Bitcoin are not legal tender and have no actual value support.” And proceeded to checklist all the things the PBOC was doing to fight cryptocurrency buying and selling.
In the NewsBTC report about it, we mentioned:
“Maybe their plan is simpler than we thought. It’s possible that The People’s Bank of China is just going to make it really really hard for the common citizen to access Bitcoin. And, China’ll use propaganda and repetition to keep people in check and scared of the unknown. One of Bitcoin’s prototipical adversarial scenarios. A battle that Bitcoin expected sooner or later.”
China Ban Theory #6: Preparing For Evergrande’s Default
Was the Chinese authorities simply closing the exits? They knew that the Evergrande scenario was inevitable and didn’t need folks to have the Bitcoin lifeboat out there. In our report, we mentioned:
“To recap: the government saw this coming from a distance. They knew the crisis was going to repeatedly hit the country and banned Bitcoin mining to scare the population into not buying the hardest asset ever created. Bitcoin, the true hedge against the collapse of every economy.”
China Ban Theory #7: FUD To Get More Bitcoin
According to John Carvalho’s wild and stuffed with assumptions concept, China bans one thing associated to Bitcoin each cycle to govern the price 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 concept is:
“The main ASIC manufacturer, the Chinese company Bitmain, had a new generation of miners ready. So, the CCP “decided to create a demand for the aftermaket and combine it with the FUD.” As they normally 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 “look at the hashrate.” This is the primary time this occurs. Then, China bought a small portion of its ASICs to the USA.”
According to him, Bitcoin mining in China didn’t cease, they’re simply not signing the blocks. Of course, he doesn’t have any proof, and neither will we. This is only a concept, 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 positive, however we have now many suspicions. Let’s hope 2022 provides us stable proof, new insights, or, a minimum of, a believable clarification.
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