The extraordinary revelation China never bans mining
You read it right. Chinese bitcoin miners, for example, are the most innovative in the world.
What about this Reuters report You can also find out more about the following: others What does it say that this is banned?
We’ll take a closer view.
It is true that the network hashrate decreased from 179.2 to 87.7 (a 51.1% decrease), which seems to confirm China’s mining ban.
According to Cambridge, China accounted for 46% of the global hashrate in the previous month. “ban” (April 2021). These figures tend to support the theory that “mining has been banned in China.”
There’s an enormous gap in the logic. When a principal expels a student for being disruptive, the consequences are not fair. “days absent from school” It doesn’t necessarily mean that you have been dismissed. This could merely mean that you have been suspended. In fact, that is what actually happened in China.
How do we know?
1. Investigative reporting
We’ll start by looking at the main news sources.
First, NBC reported At least a few miners will be working in the May of 2021 “unfazed” By the Latest “ban”.
The New York Times reported The aforementioned “ban” Citing this, in China September 2021 policy disclosure The Chinese Government is claiming that the mining activity has already recovered to 22,3% global hashrate, despite publicly-available data that was released by Cambridge in that month.
Cambridge Data showed that China will still be at the top of the world by 2021. 19,1% of the global hashrate
CNBC didn’t start broadcasting until May 20, 2022. full report The media has not reported on the large Bitcoin mining operation still taking place in China, despite this data being publicly accessible to all outlets of media since September 20, 21.
Evidence suggests that mining was never banned. It has only been suspended. Look at New York Times piece more closely. article The document that they use as proof for an outright ban.
2. The surprising discovery of Chinese law
The document that the New York Times cited as proof for the ban did not match their interpretation.
You can also find out more about the following: Chinese policy document The 24th September 2021 law does not legislate an outright ban but merely a moratorium for the construction of new mines, as well as a “signal of intent” But not an outright ban “at some stage” The grandfathering of existing mining activities is still in effect three years after the original date.
The policy, in terms of its statement of intent, states that the Chinese Government should gradually eliminate bitcoin mining because the sites do not contribute to the government’s goal for carbon neutrality. It is also easy for people to launder money and it uses a large amount of electricity.
New York Times fails to take into consideration cultural factors
China is a country where policy is often ambiguous.
As a rule, in more developed urban areas, laws are followed to the letter. This is not the case in small cities or regions.
In China, for example, there’s a law that requires all banks to reduce the number of steps required by their clients in order to obtain any certified legal documents.
Private banks in many cities do the exact opposite of what is required by law. The bank could say, for example, that if you are a child or spouse and need the remaining amount on their account after they die, it is okay to do so. “your death certificate is not enough”. In some cases, the grieving had to take the body of their loved one to the bank as proof. I kid you not.
The law will be followed by more developed cities. In China, the majority of mining is done in Inner Mongolia – far away from large cities. It is the network that matters most in these regions, and not the regulations of government. When you are connected to the right people, you can accomplish anything. “this and that” You can get around legislation.
So in summary:
1. The mining industry was not banned. However, there were unfriendly remarks about grandfathering in existing mines and a moratorium for new mining.
2. According to the official statement, the use of fossil fuels was the major reason. However, insider sources in the Communist Party have confirmed that capital control is the real reason. Expert in energy policy Magdalena Gronowska This has been cross-validated.
3. Except for coal mining, there was no moratorium in more remote areas. In these areas, mining has increased.
4. The New York Times failed to accurately represent the Chinese policy document. It also lacked cultural understanding that made the Chinese moratorium an issue that might not be enforced widely. Finally, it did not check publicly accessible hashrate records that would have shown them that large-scale mining was still taking place in China.
The first instance of a disconnect between the reported story and actual events in Bitcoin bans isn’t new. Reports of “bans” You can also find out more about the following: Paraguay It wasn’t what you thought, but a crackdown on theft of power. New York It was also overstated that (it’s not, it is a 2-year moratorium on any new fossil fuel-based mining).
Many outlets within the cryptocommunity have reported, just in this past month alone, that Venezuela has prohibited bitcoin mining. protect the power-gridEven referring to government action as “an anti-corruption initiative.”
The truth is that it’s not the source The cause of the power failures was widespread corruption The well-documented case of Venezuelan’s (power theft within the government) State Owned energy company PDVSA Inability to supply enough power for stabilization own grid. Venezuela is ranked second-worst out of 180 nations. Transparency International’s Over time, the corruption index has tended to increase.
Now, let’s go back to China. Sebastian GouspillouThe CEO of BigBlock, an expert in Chinese mining, has given us permission to use his name. own Take on this challenge: “They cut the mining and then started it again after a few weeks. But not everywhere; only where it was useful.”
3. Bitcoin mining: Interviews with industry players
Four independent mining groups operating in China were interviewed (HashX_Mining as well as three others that wished to be anonymous). Interesting is the fact that No one says they’re “risking it all“ As a CNBC News article Chinese authorities do not just suggest, they actively encourage the Chinese people to solve energy problems.
Bitcoin mining does not just occur in China. Bitcoin mining has positive environmental effects that miners have actively used.Heat recycling and the stranded renewable energies monetization are two of these.
In context, it is worth noting that the first reports of heat recycling in Bitcoin mining dates back to 2009. in Canada as early as 2018. Heat recycling, which is basically an electric resistance heating system that mines Bitcoins, has become a popular way for Bitcoin mining to lessen its dependence on fossil fuels. China is now a member of the global heat recycling movement.
One mining distributor confirmed: “With the downturn in the Chinese economy, some heavy industry has left Inner Mongolia and Xinjing province. As a result, there is often an oversupply of electricity.” Chinese authorities invited Bitcoin mining firms to fill the energy void and prevent renewable resources from being wasted.
In Inner Mongolia, the Bitcoin mining operation is typically 200-500 miner (1MW) and uses either solar or wind energy.
Consider Inner Mongolia the Texas in China. It is a bit like Texas in that it was formerly fueled by fossil fuels, but now pushes for renewable energy. renewable energy solutions Faster than anywhere else in the country 57% of the country’s wind farms). Like Texas, it needed Bitcoin mining in order to monetize renewable energy that was wasted and offset the intermittent nature of renewables.
What is the reason for China’s suspension of mining activities and the fact that the companies they have allowed back are mostly small and renewable-energy based operations?
Capital Controls
Bitcoin mining at a large scale was a problem for China. This was an easy way to move money outside of China. The large operations converted Yuan to Bitcoin and then Bitcoin into USD. Second, and less significant: Large operations used many coal factories. The government’s emissions targets were at risk.
The suspension of mining companies was an opportunity to curb capital flow out of Yuan. The original miner suspension was a chance to clamp down on capital flows out of the Yuan.
Thank you for your support. Dan Leslie The following is a list of the most recent and relevant articles. @HashX_Mining, Sebastian GouspillouCEO Big Block, Magdalena GronowskaThis report is a collaboration between, a partner at Metamesh, and two Chinese citizens who wish to remain anonymous.
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Other Context
Optional details can be added if it is of interest. If we prefer to focus on the “ban that wasn’t”We can ignore all of this.
Our interviews with Chinese companies revealed other interesting facts.
- Many new hashrates are also coming into China after the China “ban”
- There is no off-grid coal mining anymore. The problem is that it’s easy to detect, competes with baseload power and interferes in Central Govt emission targets. It has led to a reduction in the emissions intensity of Chinese post-mining.”ban”.
- The majority of mining is hydro-micro-hydro, particularly in the wet seasons. Above the red line, you will find areas that are very wet. 4 regionsXi’an is the cheapest place to buy hydro.
We also found a surprising amount of mining on the grid. Buy it at a discount Ongrid Mining
- Ongrid retail miners make a loss because, well, they pay retail rates for electricity. Why would they mine for a loss? It’s simple: they want to take their money out of China or convert the Yuan back into USD. It converts Chinese Yuan into ASICS for electricity, and then BTC. Retail miners will take a loss in profits to be able to convert Yuan into USD.
- It’s often more economically beneficial for the local government to support what central government does not. There were many stories where provincial governments made a difference. “licence to mine” In exchange for their rights to reuse recycled heat.
One 13-MW mine, as an example, is in partnership with the Provincial Govt. The government buys electricity and gets free use of the recycled heat. The heat generated by Bitcoin mining accounts for 95% the energy used. Thus, it is nearly as efficient as receiving free heating. For what do they use this (free) energy? Warming water in fish farms.
Daniel Batten has written a guest blog. The views expressed here are solely theirs. own The views expressed herein do not necessarily represent those of BTC Inc. or Bitcoin Magazine.
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Source: bitcoinmagazine.com