China ban on bitcoin

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• Legality of bitcoin by country or territory
• China’s bitcoin miners flee Inner Mongolia ahead of crypto mining ban
• Bloomberg - Are you a robot?

But later in , the government began to pressure cryptocurrency exchanges, ban ICOs, and scrutinize all cryptocurrency businesses and transactions. New regulations slowed down and shrank the market for bitcoin, but they did not make mining, owning, buying, or selling cryptocurrencies illegal. In fact, Chinese law specifically protects virtual private property, and this includes virtual money. As far back as , Chinese courts have accepted and protected virtual items — including swords!

Furthermore, the government has encouraged and incentivized Chinese companies to develop blockchain technology, which is the foundation of bitcoin. The government is also using blockchain in its experiments with digital yuan , and various local governments have encouraged bitcoin mining as a way to attract investment and create jobs. People in the crypto industry like Gieno Miao, the former miner and crypto entrepreneur, remain bullish.

However, the legal status of the entire crypto industry remains unclear. China-based crypto exchanges and ICOs are clearly prohibited, but many other parts of the industry including mining are subject to incentives and disincentives by local and central government organizations alike. Specifically, will the miners of bitcoin and other cryptocurrencies in China be able to stay in business?

There are more than , miners in China, according to Sohu News in Chinese. Most miners are now big players, either owning whole factories filled with mining computers, or buying machines and then contracting them out to factories to house and maintain. Home-based and small commercial miners are few. Machines in the factories are usually connected to mining pools which allow miners to share their computational resources to make the mining more efficient.

Miao blamed those failures on outsiders rushing into the mining industry without an understanding of bitcoin or long-term plans for their investments. Nonetheless, in China as across the world, cryptocurrencies and blockchain are marching to respectability, and established financial players are entering the game. The computers you need to mine crypto — mining rigs — have powerful and expensive technologies at their heart, usually graphics processing units GPUs or application-specific integrated circuits ASICs.

Big players need hundreds of these mining machines, which are in such demand that customers need to join wait lists to be eligible to purchase. Demand is so high right now that there are waiting times of around half a year, but many Chinese bitcoin veterans know how to use their social connections, sometimes incentivized with additional fees, to jump the queues. In the U. A high-rate machine consumes 3. Dong Wu, a manager of a company that mines Bitcoin, Ethereum, and Filecoin, told SupChina that electricity is his biggest cost.

Miao put some numbers on it, saying that some factories pay several millions of dollars a month for juice. A final hurdle that Chinese crypto miners have to surmount: When the government put Chinese cryptocurrency exchanges out of business, it became difficult to legally buy or sell virtual money with yuan. So holders of Chinese crypto have to do some of their business abroad if they want to exchange their coins for yuan through OTC over-the-counter markets operated outside of China. These include Huobi and Binance — both founded in China but now with legal bases in the U.

The Chinese government clearly wants to maintain tight control over all aspects of cryptocurrencies, from their energy use to their potential risk to the financial system. But crypto veteran Gieno Miao insisted that the government was still generally positive, mentioning three places that lend support: the provinces of Yunnan and Sichuan, and the city of Hangzhou.

Chinese journalist Colin Wu, who writes at WuBlockchain in Chinese , told SupChina that the government neither supports nor suppresses the crypto mining industry at a national level, but some county and city governments support it if it can create jobs and grow the local economy.

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There is very little publicly available information about the finances of Chinese mining companies. As with nearly every other product on earth, as long as there is demand, Chinese manufacturers will step up to meet it. Chinese crypto mining is here to stay. She is a fan of cooking, tennis and traveling. Read more. Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.

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Price gains are likely to moderate, leading to a modest decline in resources earnings in fiscal , although growth in demand for the materials vital to the clean energy transition is seen buoying the industry out to and beyond. Article of the General Rules of the Civil Law of China, which took effect on October 1, , provides that: "In case laws have provisions on the protection of data and internet virtual properties, such laws should be complied with. Senior officials of PBOC have publicly encouraged the use of blockchain technology to improve the convenience, promptness and low cost of retail payments.

It should be noted, however, that China's digital money would still be fully controlled by the central government, in contrast to the nongovernmental nature of Bitcoin. Many other banks have reportedly made experiments and even progress on the use of blockchain technology to improve their transaction systems.

Despite the ban on ICO and cryptocurrency exchanges, PBOC and other government agencies have consistently showed great enthusiasm towards the application of blockchain technology for the goal of modernizing China's financial systems and becoming a world leader in this new innovative technology. In recent years, various guidelines and papers issued by the government have endorsed blockchain technology and even placed blockchain technology in the same category of big data and artificial intelligence AI.

In the past twelve months, many local governments sponsored the formation of sizable investment funds to make investment in startups of blockchain technology and applications. However, the endorsement of blockchain technology is not without reservation. In the view of PBOC, blockchain technology and digital currency should be researched for the goal of better service to the real economy.

PBOC believes that blockchain technology can be developed without the use of tokens, which are believed to have been the roots of various social problems such as illegal fundraising and fraud. Given that cryptocurrency exchanges were banned in China, cryptocurrencies may only be traded in a peer-to-peer manner. The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. All Rights Reserved. Password Passwords are Case Sensitive.

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Background: To understand the harsh attitude of the Chinese government towards ICO, we have to look at the big picture of China's economy and financial market. Exchanges China's Policy: The Notice also targeted cryptocurrency exchanges and ordered that any so-called "fundraising and trading platforms" shall not: - Offer exchange services between fiat currency, tokens and "virtual currencies"; - Buy or sell tokens or "virtual currencies", or buy or sell "virtual currencies" as a central counterparties CCP ; or - Provide price determination or information intermediary services for tokens or "virtual currencies".

Adjustments of Market Players: In the several months after the Notice, most of the cryptocurrency exchanges closed down their platforms in China but continued exchange business through platforms registered in foreign jurisdictions such as Japan, Hong Kong, Korea or other jurisdictions which seemed to be more favorable to the exchange business than China. Legality of Adjusted Business Models: Those modified business models are not entirely safe from the Chinese criminal law perspective.