One of the biggest topics of 2021 was the ban on mining crypto by china. On the one hand, the crackdown has affected the price of the number one crypto-asset and bolstered the opinions of skeptics who believe such a ban is spreading around the world. On the other hand, the network continued to operate efficiently, recovered its hashrate and continued its decentralization. However, a question remains: Why did China exclude itself from this very lucrative activity in which it dominated? As entrepreneur John Carvalho put it less eloquently: ” I refuse to believe China is stupidthere must be a reason, even if it is simple. So, to have all the information at our disposal, here is an overview of the theories born this year!
Theory 1: Promoting CBDC, e-CNY
This one is as simple as possible. When China started cracking down on minors, this theory was one of the first to emerge. The country has gone to great lengths to implement, test, and finally launch the central bank digital currency during the grandest sporting event: the Olympics.
So, has China killed off a potential billion dollar industry just to crush competition from their CBDC?
Theory 2: Power Outages
Does China have energy problems?
The government has repeatedly accused miners of overloading the country’s energy grid, and the current shortage may well explain the industry’s sacrifice of mining .
According to the Beijing Economics and Information Bureau, the energy consumption related to these activities was a real concern.
Yu Jianing, acting chairman of the Blockchain Special Committee of China, said the country’s environmental requirements could drive the mining of cryptocurrency to very strict regulation. Jianing said it would be ” inevitable “.
However, would the country decommission small hydropower plants if this were the case?
Theory 3: Cleaner energy sources
NewsBTC’s report on small hydro, citing local sources, was actually affected by the government’s stance, so it’s best viewed through a lens of skepticism. It begins with a statement that strongly opposes Theory 2:
” According to the article, the peak of private power plants in China was reached at the beginning of the 21st century. Investors built thousands of hydroelectric plants because they saw them as a constant cash cow. For their part, the neighboring regions saw it as a sign of progress and a solution to their energy problems.
However, while the electricity surplus has been increasing in China in recent years, the electricity produced by hydroelectric power plants has not been used for its intended purpose, if at all. So it was energy losses.»
Notwithstanding, the main reason for the downgrading seemed to be the repair of the initial 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 province’s provincial water resources department.
So it is possible that the government is trying to get rid of these plants. This would explain the tone of the Chinese article, which seems to want to encourage investors to stay away from these hydroelectric plants. In this regard, the ban on miningcould just be part of an even bigger game. They are serious and methodically shake things up there.
Either way, it makes no sense: hydroelectric power is relatively clean energy. What could be their end goal? Is China just trying to become carbon neutral and restore the original flow of rivers? That leaves too many questions.
Theory 4: The New Business Model
This is the theory, supported by Bloomberg, which speaks of a model ” less founder-centric and more China-centric 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 overshadowing its biggest industries and players? Does the “Chinese model” only aim at economic equilibrium? Or is it the control that is at the center of his concerns? Is it cracking down on people and corporations that have too much power and operate globally? »
While not entirely believable, this theory introduced the concept that China was also cracking down on its biggest tech leaders. Perhaps the Chinese government’s efforts aren’t just targeting the Bitcoin network?
Theory 5: Make bitcoin harder to use
This version does not explain the general framework of the Chinese ban. Yet it can embellish whatever theory you prefer.
Yin Youping, Deputy Director of the People’s Bank of China’s Financial Consumer Rights Protection Office, remarked:
” We once again remind our citizens that virtual currencies such as bitcoin are not legal and have no real medium of value. while listing everything the PBOC is doing to fight thetradingof cryptocurrency.
Maybe the state plan is simpler than we thought. It is possible that the People’s Bank of China is just making it very difficult for ordinary citizens to access bitcoin. And China will use propaganda to keep the population in check and fear the unknown, which sums up a battle Bitcoin expected sooner or later.
Theory 6: Preparing for Evergrande Default
Did the Chinese government just “close the exits”? He knew Evergrande’s situation was inevitable and didn’t want anyone to be able to save themselves with the first cryptocurrency available.
The Bitcoin.com report summarizes:
“The government anticipated the outcome. He knew the crisis would hit the country repeatedly and banned bitcoin mining to scare people away from buying this volatile but fairly reliable long-term asset. Bitcoin is the real hedge against the collapse of any economy.»
Theory 7: FUD to get more bitcoins
According to John Carvalho’s wild and speculative theory, China has banned anything related to bitcoin to manipulate the price and get morecorners. The country has no incentive to ban the industry. They make too much money doing theminingof the cryptocurrency and they control the hardware manufacturers ofmining.
Thus, Carvalho’s theory is as follows:
“The main manufacturer of ASICs, the Chinese company Bitmain, has designed and manufactured a new generation of miners. Thus, the Chinese Communist Party decided to create increased demand in the market, combined with the FUD. Then China banned theminingof bitcoins and the whole country has disabled ASICs. The world saw the ban as real, having seen thehashratedrop considerably. Moreover, they exploited the element of surprise, because it was the first time that this had happened. After which, China sold a small portion of its ASICs to the United States.»
According to the entrepreneur, theminingBitcoin trading in China hasn’t stopped, they just don’t sign the blocks. True, it has no proof and it is only a theory, like all the others.
What is really going on in China? What is the reason for the cryptocurrency crackdown? We wouldn’t know for sure, but we have a lot of suspicions. Hopefully 2022 will give us solid evidence, new insights, or at least a plausible explanation.
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