After the State Council of China recently announced a crackdown on bitcoin mining and trading practices, several well-known mining pools and companies announced they are leaving China, and moving their businesses to other countries. Several mining platforms have announced that they are blocking IP addresses from China.
The “mining” of virtual currency refers to the process of mathematical computation through computer nodes for the blockchain network, and the competition of transaction validation.
The companies running these computer nodes are the “miners,” and the nodes are the “mining rigs.”
Also on May 26, Mars Cloud Mine also announced that it would block access to IP addresses in mainland China.
Mining Companies Go Overseas
Most of the mining companies have chosen to go overseas under the pressure from the CCP’s regulatory policy. Kazakhstan and North America are among the most popular regions.In addition, many miners are selling off their bitcoin mining rigs in China.
3 Strikes in One Week
In a time frame of only a week, virtual currency mining and trading in China has been hit hard by the three major financial industry associations, the Financial Committee of the CCP and local governments.On May 26, the official website of Inner Mongolia Development and Reform Commission released “eight measures” to strictly control virtual currency mining behavior.
According to the measures, data centers, enterprises, Internet cafes, individuals, civil servants, and other subjects can all become subjects of punishment, and penalties include the cancellation of preferential policies, revocation of licenses, suspension and rectification, and inclusion in the blacklist of defaulters.
Violations can also be transferred to judicial organs, the CCP’s discipline inspection, and supervision organs.
First, the decentralized nature of cryptocurrencies prevents the state from manipulating exchange rates, currency issuance, or inflation and deflation.
Yang said the free and democratic nature of cryptocurrency may induce a reconstruction of social order and structure. So from this perspective, it shakes the very foundation of the CCP, and the CCP would sooner or later crack down on it.
Secondly, the CCP has implemented the digital renminbi and plans to fully launch it during the 2022 Winter Olympics. It has already started to introduce it to domestic financial institutions. To ensure the domination of its own digital yuan is another reason for the CCP to crack down on cryptocurrencies, according to Yang.
Thirdly, a large amount of RMB or USD reserves may go overseas through the anonymity and anti-counterfeiting features of cryptocurrency, which is also of grave concern to the CCP.
Yang believes that the CCP is launching a comprehensive crackdown bitcoin and all cryptocurrencies. Exchanges, digital currency related businesses, mining and pool providers, and transactions are all targeted, he believes. It is almost a total ban on cryptocurrencies.
“The CCP will not allow the high volatility of cryptocurrencies to affect the stability of the CCP regime,” Yang said.