One of the biggest stories of 2021 has been China’s ban on Bitcoin mining. On the one hand, the news has affected the price of Bitcoin and has given ammunition to opponents who believe governments are going to ban Bitcoin. On the other hand, the network continued to operate smoothly, got his hashrate in record time, and gained in decentralization. However, one question remains. Why did China exclude itself from this very lucrative activity that it dominated?
As Bitcoin entrepreneur John Carvalho put it not so eloquently, “I refuse to believe that China is stupid.” There must be a reason, no matter how simple. To help our audience solve the puzzle, NewsBTC decided to bring all of our theories together in one article.
China’s Ban Theory # 1: The Digital Yuan CBDC
This one is as simple as it gets. When China has started cracking down on minors, NewsBTC reported, “As for the possible reasons, Lucas Nuzzi of Bitcoin Magazine cites the upcoming Digital Yuan CBDC.” And Nuzzi said, “They are literally launching their own coin (a CBDC) that will allow for mass surveillance and removal from the dissident bank.”
1 / The CCP officially bans #Bitcoin shouldn’t come as a surprise.
They are literally launching their own coin (a CBDC) that will allow mass surveillance and the removal of the dissident bank.#Bitcoin is in total contradiction to that. Dictatorships don’t like the money of freedom.
– Lucas Nuzzi (@LucasNuzzi) June 21, 2021
So, has China killed a potential billion dollar industry just to crush competition from their CBDC? Is that right?
China Ban Theory # 2: Power Outages
Does China have energy problems? In this same article, we posed another theory:
“Looking back, we should have seen it coming. Only two months ago, following a suspicious breakdown, NewsBTC reported:
According to the Beijing Economic and Information Bureau, there are concerns about energy consumption related to these activities. PengPai quotes Yu Jianing, rotating chairman of the China Blockchain Special Committee, as saying that the the country’s environmental requirements could lead to crypto mining being more “strictly regulated”. Jianing said it would be “inevitable”.
However, would they be dismantling small hydropower plants if that was the case?
China Ban Theory # 3: Cleaner Energy Sources
Our rsmall hydropower plant reportThe source was the government regulated media, so take it with a grain of salt. It starts with a claim that clashes strongly with Theory # 2:
“According to the article, the heyday of private power plants in China was the turn of the century. Investors built thousands of hydropower plants because they saw them as a constant cash cow. For their part, neighboring regions see it as a sign of progress and a solution to their energy problems.
However, with the progressive surplus of electricity in China in recent years, the electricity produced by hydropower plants is often doomed to be abandoned (commonly referred to as “electricity abandonment”) “
Nevertheless, the main reason for the decommissioning appeared to be the repair of the original flow of the rivers. “Hydroelectric power stations have always been one of the important factors limiting the ecology of Sichuan rivers,” said Wang Hua, deputy director of the water resources department of Sichuan province. We went further:
“The government may be trying to get rid of these plants. That would explain the tone of the article, it seems it was trying to steer investors away from these hydropower plants. In light of this, China’s ban on Bitcoin mining may well be part of an even bigger game. They are serious and methodically shake things up there.
What could their endgame be? Is China just trying to go carbon neutral and fix the original flow of rivers? Or is there something else at stake here? “
However, something is wrong. In another article on the ban, we emphasized that hydroelectric power is clean energy.
“Has China made the mistake of a lifetime by banning Bitcoin mining or does it have a secret plan?
The fact that the electricity for crypto mining in Sichuan came from clean hydropower meant that many believed the province would be a safe haven for Bitcoin miners.
China Ban Theory # 4: The New Chinese Model
We explored Bloomberg theory about a “less founder-centric, more China-centric” model that China was supposed to explore.
“If China abandons the Silicon Valley model, what will it replace it with?” Insiders suggest it will be less founder-focused and more China-centric.
Why is China eclipsing its biggest industries and players? Is the “Chinese model” only about scale? Or is control their goal? Are they cracking down on the overpowering people and companies working globally? “
And while that wasn’t entirely believable, it introduced the concept that China was cracking down on its top tech leaders as well. Maybe it’s not just Bitcoin?
BTC price chart for 01/02/2022 on Bitrex | Source: BTC/USD on TradingView.com
China Ban Theory # 5: Making Bitcoin Hard to Use
This one does not explain the general theme of the ban on China. However, it adds color to the theory you prefer. At an event, Yin Youping, deputy director of the Financial Consumer Rights Protection Bureau of the People’s Bank of China, said, “We once again remind people that virtual currencies such as Bitcoin do not have legal tender and have no material of real value. And proceeded to list everything the PBOC was doing to combat cryptocurrency trading.
In the NewsBTC report on this, we said:
“Maybe their plan is simpler than we thought. It is possible that the People’s Bank of China is making bitcoin access really very difficult for the ordinary citizen. And, China will use propaganda and repetition to keep people in check and fear the unknown. One of Bitcoin’s prototipic adversarial scenarios. A battle Bitcoin expected sooner or later.
China Ban Theory # 6: Preparing For Evergrande Failure
Did the Chinese government just close the exits? They knew that the Evergrande situation was inevitable and didn’t want people to have the Bitcoin lifeboat available. In our report, we said:
“To recap: the government saw this coming a long way. They knew the crisis was going to hit the country several times and banned Bitcoin mining to scare people into not buying the toughest asset ever. Bitcoin, the real hedge against the collapse of every economy.
China Ban Theory # 7: FUD To Get More Bitcoin
According to John Carvalho’s wild and hypothetical theory, China bans something related to Bitcoin every cycle to manipulate the price and get more BTC. The country has no incentive to ban the industry. They make too much money mining, plus they control the ASIC makers, plus the mining machines inflate the value of chips, and they also control this business. Thus, Carvalho’s theory is:
“The main manufacturer of ASIC, the Chinese company Bitmain, had a new generation of miners ready. Thus, the CCP “decided to create a demand for the secondary market and combine it with the FUD.” As usual, they sold their Bitcoin and made their shorts. Then China banned Bitcoin mining, and the whole country disabled ASICs. The world saw the ban as real, you just have to “look at the hashrate”. This is the first time this has happened. China then sold a small portion of its ASICs to the United States.
According to him, Bitcoin mining in China hasn’t stopped, they just aren’t signing the blocks. Of course, he has no proof, and neither do we. It is only a theory, like all the others.
What is really going on in China? What is the reason for the great Chinese ban of 2021? We wouldn’t know for sure, but we have a lot of suspicion. Hopefully 2022 gives us solid evidence, new insight, or at least a plausible explanation.
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