One of 2021’s greatest tales was the China ban on Bitcoin mining. On one hand, the information affected Bitcoin’s worth and gave ammunition to the nay-sayers that suppose that governments will outlaw Bitcoin. On the opposite, the community stored working with no 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 by 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 purpose, 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 submit.
China Ban Theory #1: The Digital Yuan CBDC
This one is as simple because it will get. When China started cracking down on miners, NewsBTC reported: “As for the possible reasons, Bitcoin Magazine’s Lucas Nuzzi cites the upcoming Digital Yuan CBDC.” And Nuzzi stated, “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 don’t love freedom cash.
— Lucas Nuzzi (@LucasNuzzi) June 21, 2021
So, did China kill a possible billion-dollar trade simply to squash their CBDC’s competitors? Is that it?
China Ban Theory #2: Blackouts
Is China having vitality points? In that 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 concerning the vitality consumption associated to those actions. PengPai quotes Yu Jianing, rotating Chairman of the Blockchain Special Committee of China, to assert that the country’s environmental requirements could lead to crypto mining being more “strictly regulated”. Jianing stated this shall 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 continuing 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 principle purpose for the decommissioning appeared 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,” stated Wang Hua, deputy director of the Sichuan Provincial Water Resources Department. We went a step additional:
“It’s doable 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 avoid these hydropower stations. In mild of this, China’s ban on Bitcoin mining might simply be a part of a fair larger play. They’re severe and methodically shaking issues up over there.
What might 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 another article about 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 proven fact that the electrical energy for crypto mining in Sichuan got here from clear hydropower meant that many thought the province can be a protected haven for Bitcoin miners.”
China Ban Theory #4: The New China Model
We explored Bloomberg’s theory 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 is going to it change it with? Insiders recommend will probably 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 although 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 worth 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 colour 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, stated, “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 record every little thing the PBOC was doing to fight cryptocurrency buying and selling.
In the NewsBTC report about it, we stated:
“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 situation was inevitable and didn’t need folks to have the Bitcoin lifeboat obtainable. In our report, we stated:
“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 full of assumptions theory, China bans one thing associated to Bitcoin each cycle to control the worth and get extra BTC. The nation has no incentive to ban the trade. They make an excessive amount of cash mining, plus they management the ASICs producers, plus mining machines inflate the worth of chips, they usually 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 offered 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 offered 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 can 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 certain, however we’ve got many suspicions. Let’s hope 2022 offers us stable proof, new insights, or, no less than, a believable rationalization.
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