Why China’s Crypto Mining Ban Might Not Be Absolute Nationwide Prohibition?
A couple of days back BitcoinExchangeGuide had reported a story of how the Chinese government was looking at banning mining activities from within its borders. The country’s state planner had released a draft of all the industrial activities it is looking to slowly weed out from within its economic framework. The Chinese National Development and Reform Commission (NDRC) had also stated that the mining industry was being added to the draft due to its unsafe and non-environmental friendly nature.
Before we get into more on how this impact the nation’s mining industry, let us take a look at how the Chinese government's policies have flip-flopped around this matter. On December 2013, BTC was preemptively banned in China. March 2014, China said that it is not. Then on November 2015, China led the bull-run to new heights. December 2016 marked the tipping point when China had the buying power to crash the crypto Market. In September 2017 – China said Bitcoin is fine, however, exchanges are not. August 2018 China shifted its policies leaning towards the position that Bitcoin should be monetized. Now, in April 2019, China seems to have had enough.
We should always remember that China might again flip their stance. There are already rumors that this is the Chinese efforts t send the recent crypt bull run back to bearish ways. Cryptocurrencies are an effective way to evade the Chinese strict monetary regulations too. This gives another incentive for the government to stop Bitcoin.
However, even if the ban goes through, an outright ban on mining might not exist. If we read the NDRC’s policies, it says:
“Government Investments are prohibited from being contributed to projects of the eliminated category. All financial institutions shall stop various forms of credit granting supports to such projects, and take measures to recover the granted loans. If any enterprise of the eliminated category refuses to eliminate the production technique, equipment or products, the local people’s government at each level and the relevant administrative department shall, in accordance with the relevant laws and regulations of the state, order it to stop production or close it.”
On the first looks, the policy might look like an outright ban, but there is a catch that contains within the lines “the relevant laws and regulations of the state.”
To see what the silver line can be, we have to look at the 2005 Interim Provisions that the local governments have when implementing the industrial policies. It basically says that to keep the stable and fast development of the economy, it will be the local government's duty to carry on the execution of the policies. However, it often is the case that doing so might not be in the interest of the local government to do so.
Tyler Xiong, the Cheif Marketing Officer of Bixin said:
“First, bitcoin mining doesn’t result in pollution. It actually helps consume excessive electricity [generated by local plants] that would otherwise go to waste. And it creates jobs and revenue locally. Eliminating that could conflict with local interest because it can benefit the local economy.”
We will have to wait for sometime to see how this all plans out, however, you don’t have to worry about the mining ban resulting in a bear market. Read our article which explains why China’s latest ban can be a blessing in disguise for the industry.