China is considering a ban on bitcoin mining within the country. Quite how they’ll ban anyone connecting up a mining rig is, well, that’s for them to work out. The thing is, they would, wouldn’t they? For two entirely different reasons – and then there’s the third they actually mention. Bitcoin has been used as a rat run out of yuan, which isn’t going to please the government as they’ve been trying to keep that value nice and high. And of course the whole selling point of the Chinese Communist Party is economic competence through centralised planning. Who, retailing that idea, is going to be happy with a decentralised money producing system?
China’s top economic planning body has proposed new rules that would see the closure of all local cryptocurrency mining facilities if enacted – a move that would potentially end the country’s dominance in the energy-hungry, yet lucrative industry.
That energy hunger is the given reason of course. Any fast growing economy does find that energy to continue to grow is one of the constraining factors. So, fair enough perhaps:
China’s state planner wants to eliminate bitcoin mining in the country, according to a draft list of industrial activities the agency is seeking to stop in a sign of growing government pressure on the cryptocurrency sector.
That might be more the way to read it though.
China has been trying to keep the yuan nice and high. Both to limit inflation and also because Trump and others have been shouting about currency manipulation. So, to keep it high people must not be allowed to move capital out of the country. Exchange yuan for $ freely. But of course that’s just what a crypto like Bitcoin makes trivially easy. So, they’re not in favour.
A notice published online in Mandarin by the country’s economic planning agency added “virtual currency mining activities [including] the production process of Bitcoin” to a list of industries that could be shut down. The suggestion is that the power consumed by the industry contributes to pollution and wastes resources.
Depending upon how good your Mandarin is you can read that notice here:
But there’s also that more basic point. If you’re selling the idea of centralised and thus efficient control of the economy you’re not going to be in favour of people doing anything as free market as making their own money now, are you? Our reading here is that the stated reason is nice but the real reason is a blend of the other two. Meaning, well, they would, wouldn’t they?